Annex I Director-General's Comments on
the Methodology for Adoption of the Budget
Rate xxi

VIEWS AND COMMENTS OF THE DIRECTOR-GENERAL

Introduction

1. In Resolution 6/87 which launched the Review of FAO, the Con-
ference invited the Director-General "to submit the conclusions and
recommendations of the study, together with his views and comments, to
the Council, which will transmit it, together with its views, to the
Twenty-fifth Session of the Conference". Accordingly, the Director-
General takes pleasure in forwarding the attached report of the Pro-
gramme and Finance Committees, containing their conclusions and
recommendations. The views and comments of the Director-General are
given below.

2. Resolution 6/87 provided for the Programme and Finance Committees
to be assisted by experts. The Committees established two Groups of
Experts, dealing respectively with FAO's Objectives, Role, Priorities
and Strategies, and with FAO's Field Operations. These subjects are
covered in Part I of the Committees' report. The Committees have
appended the reports of both Groups of Experts, the comments on these
reports by the Director-General, and certain other material submitted
in connection with the Review. These appendices are being circulated
in a separate volume as C 89/21-Sup.l.

3. On the proposal of the Director-General, a Management Review was
carried out by external consultants at the same time as the Review
called for in Resolution 6/87. Part II of the report of the Programme
and Finance Committees covers the Management Review. The Director-
General has given his views and comments in the second part of the
present paper. The Executive Summaries of the reports of the Manage-
ment Consultants are included in C 89/21-Sup.l.

4. The present document and its supplement thus provide the Council
and Conference with a complete dossier on the Review process.

FAD'S OBJECTIVES, ROLE, PRIORITIES AND STRATEGIES
AND FAD'S FIELD OPERATIONS

General Remarks

5. During the discussions which led up to the adoption of Resolution
6/87 there was, in the words of the Conference Report, "unanimity...on
the need to strengthen FAO in every possible manner, so that it could
continue to play a leading role in world agriculture during the years
ahead" (C 87/REP, para. 138). Nevertheless, the decision to undertake
the Review of FAO was a controversial one, with strong disagreements
over the need for a Review at this particular juncture, and over the
mechanism to carry it out.

6. Considering this background of controversy, it is surely very
important that the proposals of the Experts were all unanimous, and
that the Programme and Finance Committees reached a consensus on
almost all the issues they considered. It is greatly to be hoped
that full agreement will be reached at the Council and Conference, so

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that the conclusions of the Review can be adopted unanimously. For
his part, the Director-General has done everything possible to foster
a consensus, and in this spirit he supports the findings and recommen-
dations of the Committees.

7. The Director-General is pleased to note that the Expetts and the
Committees conclude their Review by finding that FAO "remains a solid
and dynamic institution". In the words of the Experts, "this certifi-
cate of good health does not preclude opportunities for making FAO
more efficient and effective". The Director-General is confident that
this aim can be achieved if the recommendations emerging from the
Review can be implemented successfully.

8. The one major obstacle still to be overcome is the financing of
measures that involve new expenditures. The estimated costs are
mentioned in the Director-General's comments on individual recommend-
ations. The problem as a whole is dealt with in the Director-
General's comments on Chapter 5 of the Committees' report.

9. The Director-General's views and comments on the recommendations
of the Committees follow the order of the Committees' report. He has
not commented on all conclusions and recommendations, but only on
those where he felt there were additional points that might be borne
in mind by the Council and Conference.

Evolution and trends in food and agriculture

10. The Conference called for the Review to be conducted "in the
light of the evolution and trends in the world food and agriculture
situation". Prospects for world food and agriculture are analysed in
Secretariat document SJS 1/4, in the reports of both Groups of
Experts, and in the Annex to the report of the Committees prepared by
the Chairman of the Programme Committee.

11. If a single conclusion can be drawn from these analyses, it is
that agriculture must remain high on the international agenda for the
foreseeable future. For instance, the Group of Experts on FAO's
Objectives, Role, Priorities and Strategies (Group I) points out that
agriculture can still "tilt the balance between sustainability and
deterioration of the resource base and between political stability and
turmoil. It can underpin or undermine global prosperity". The Group
feels that the analysis of prospects for supply and demand put forward
by the Secretariat in SJS 1/4 may err on the side of optimism; it
fears that production may be lower, demand may be higher, and markets
may be tighter than the document projects. It sees a "pivotal role"
for FAO in the assessment and solution of the twin problems of chronic
shortages and chronic surpluses. Annex I to the Committees' report
speaks of "several factors likely to lead to worsening agricultural
and rural poverty" (para. 8).

12. The Director-General believes that the years ahead will see
continually mounting pressures on FAO to do more and more things for
more and more people. In the few months that have passed since the
Experts completed their work, two new challenges have begun to emerge
on the horizon. The first relates to the current round of multi-
lateral trade negotiations in GATT. As the Council and Conference are

being informed separately, these negotiations are expected to lead to
an agreement that the Codex Alimentarius Commission (jointly sponsored
by FAO and WHO and with its secretariat in FAO) and the International
Plant Protection Convention (sponsored by FAO which also provides
secretariat services) should play a major technical role in helping
GATT to resolve agricultural trade disputes. The second development
arises out of changes underway in some countries of Eastern Europe,
including a rethinking of agricultural policies. It appears not
improbable that FAO will at some stage be asked to play a role. And
in a broader context, the USSR has publicly expressed interest in
joining FAO, although the possible timing is still unclear.

13. Such developments bring home the fact that the world is in a
phase of rapid change. The global economy in food and agriculture is
becoming ever more complex: new problems are added, while the old
problems do not go away. Between 1988 and the year 2000, it is
expected that there will be one billion extra mouths to feed -
90 percent of them in developing countries. Despite progress on many
fronts, the total number of the malnourished continues to rise
remorselessly. The world is going to need a stronger FAO, and FAO is
going to need stronger support from the world.

14. FAO's objectives The Committees, basing themselves on the report
of the Experts, have identified seven development objectives pursued
by FAO. They have listed these objectives in para. 2.6 of their
report. The Director-General is pleased to note their conclusion that
these objectives are consonant with the purposes given in the Preamble
to the Constitution of FAO, and relevant to Article I. Despite the
far-reaching changes that have occurred since the Constitution was
drafted, the Committees feel that these texts remain relevant and
valid.

15. The major roles of FAO Much attention was devoted in the course
of the Review to the balance between the three major roles of FAO: in
assembling and disseminating information; in serving as an inter-
national forum for reaching agreement and promoting action on issues;
and in providing technical assistance to Member Nations.

16. Probably there will always be a measure of disagreement as to the
emphasis to be placed on these respective roles, since they tend to be
of different value to countries at different stages of development.
Generally speaking, high-income nations will tend to emphasize the
information and forum functions of FAO, while developing nations and
particularly the least developed countries will be more concerned
about the provision of technical assistance. These viewpoints are
reflected in para. 2.11 of the Committees' report.

17. In the view of the Director-General, such inevitable differences
in emphasis do not imply different visions regarding the future of
FAO. Considering the mandate of FAO, all three are essential roles,
and in many ways interlocked. Information provides the basis on which
an international forum can act. And agreements in a forum lead to
technical assistance being channeled to areas of need. Current events

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show the vitality of the Organization in all three roles. A major
effort is underway to strengthen FAO's information systems so that it
can function as a World Agricultural Information Centre (WAICENT);
this has been welcomed by the Experts and the Committees. The FAO
Conference will be considering a proposal for an international
conference on nutrition to be organized jointly with WHO an impor-
tant new venture for FAO as a forum. And in the area of technical
assistance, FAO remains under continuous pressure to step up its
efforts for needy countries.

18. Probably everyone would agree that FAO should do all it reason-
ably can to promote the development of the poorer countries, and
everyone would recognize the importance of quality in the delivery of
technical assistance. It is agreed by all that FAO's Field Programme
should draw upon, and feed into, the Regular Programme, and it is
obvious that there is a limit to the volume of field operations that
can be technically supported by the Organization.

19. Given the extent of practical agreement which already exists, the
Director-General does not believe that the issue of "balance" between
major roles, or "balance" between Regular Programme and Field Pro-
gramme, need become a bone of contention among the membership. For
his part, the Director-General will continue to take the necessary
precautions to ensure that a reasonable balance between the three
roles is maintained, in the light of the overall capacity of the
Organization. The related issue of selection of field programmes is,
in the Director-General's opinion, satisfactorily covered in the
Committees' paragraph 2.27.

20. The policy role of FAO A special word is necessary about the
policy role of FAO. The Director-General is satisfied with the
Committees' findings and recommendations on this subject (paras.
2.15-2.20), which if endorsed by the Conference will give him practi-
cal guidance for the future activities of the Organization. He merely
wants to point out here the need for a realistic appreciation of what
FAO can do. Policy advice is an extremely serious matter, and it must
draw on the accumulated knowledge of the Organization. Policy studies
can vary greatly in scope, but experience shows that the overall
number which FAO can successfully handle in a year is rather limited.
Whether the present level of activity will have to undergo a major
increase will depend on the level of demand from requesting govern-
ments, and this will also influence the secretariat arrangements
needed to organize the work.

21. The Director-General agrees with the Committees that sub-sectoral
policies are the area for which FAO is best equipped. Sub-sectoral
studies require a deep knowledge not only of the technical discipline
or disciplines involved, but also of the country situation in which
new policies are to be formulated. The necessary expertise has to be
mobilized both inside FAO and also from outside sources. The person-
nel for each and every study must be chosen ad hoc, drawing on staff
members with the required background and on consultants. It is not
feasible approach to expect that a small group of permanent staff
could themselves undertake policy studies requiring a wide range of
technical expertise, linguistic ability and country knowledge. On the
other hand, a core of regular staff is obviously required to do the
necessary organizing and in-house coordination.

- vii -

22. The Director-General draws particular attention to and strongly
supports the criteria for undertaking policy studies put forward by
the Committees in para. 2.20.

23. The average cost of a policy study can be taken as US$ 400,000,
mostly for consultants and travel. For ten such studies in the course
of a biennium the total cost would therefore be US$ 4,000,000.

24. The Committees, and the Experts, have drawn attention to the
importance of FAO contributing to such policy-oriented undertakings as
structural adjustment and the organization of Round Tables and Consul-
tative Groups by UNDP and the World Bank respectively. The Director-
General agrees that FAO should participate fully in such exercises
when it has something to contribute, and when its presence is desired,
in the first place by the country concerned. The extent of the demand
for FAO's services is not yet clear, but the cost estimates include a
figure of US$ 150,000 for this purpose. In some cases, probably the
Organization's contribution would be linked to policy studies as just
discussed above.

25. Linked to the policy role of FAO is a recommendation originally
formulated by the Group of Experts on FAO's Field Operations that the
Organization should strengthen its capacity to undertake major
regional studies, along the lines of those already carried out in
Africa and in Latin America and the Caribbean. This is estimated to
cost US$ 1.6 million for one regional study per biennium.

26. Research and technology The Director-General agrees fully with
the views of the Committees (paras. 2.21-2.24) on the continuing
importance of research and the transfer of technology, particularly
for the most underprivileged countries and the most deprived
producers. He also agrees on the usefulness of strengthening links
between FAO and the International Agricultural Research Centres
(IARC's) affiliated to the Consultative Group on International
Agricultural Research (CGIAR). It may be helpful to recall that the
CGIAR is sponsored by FAO as well as by UNDP and the World Bank, so
that it is by no means a body totally external to the Organization.
Indeed, technical guidance for both the Group itself and the IARC's is
provided by a Technical Advisory Committee, serviced by a Secretariat
that is an integral part of FAO. Alongside the IARC's, the Director-
General would like to underline the importance of stepping up coopera-
tion with national agricultural research systems. Indeed, the
strengthening of such systems in countries where they are still weak
is often vitally important, not just for the development of an
autonomous research programme, but also for the testing and adaptation
of technology developed internationally at the IARC's and elsewhere.

27. The Committees' recommendation in para. 2.64(iii) calls for the
necessary attention to be given to technologies, genetic resources and
appropriate farming systems from all over the world, with a view to
improving, transferring and promoting them, in particular through
TCDC, in order to maximise their impact on agricultural development.
The scope of this recommendation is very wide, and the Director-
General believes that the best starting-point would be intensified
collaboration with the individual IARC's, combined with arrangements
with developing countries on an ad hoc basis. He is convinced that
there could be great value in an expaniaed role for FAO at the national
level in assisting the two-way flow of information between country

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research systems and the centres composing the CGIAR network. i As a
cost estimate for implementing para. 2.64(iii) the Director-General
has retained a figure of US$ 220,000 per biennium which was originally
submitted to the Committees in connection with a proposal from the
Experts for strengthening in-country research capability.

28. The Committees, and the Experts, have placed a considerable
emphasis on biotechnology. A programme increase for biotechnology
amounting to US$ 322,000 is already included in the Proposed Programme
of Work and Budget for 1990-91. To take account of the recommenda-
tions emerging from the Review, a modest additional expansion of
US$ 50,000 per biennium is suggested by the Director-General.
Incidentally, many of the centres affiliated to the CGIAR need no
encouragement from FAO to make greater use of biotechnology, having
already been extensively engaged in this field for a number of years.

29. Role of FAO in the New International Economic Order The Commit-
tees have briefly analysed FAO's contribution to the New International
Economic Order, and agreed that the Organization should be able to
strengthen certain activities relating to ECDC (para. 2.34). The
Director-General has estimated a total cost of US$ 200,000 per
biennium.

30. Other forms of strengthening Additional activities in support of
sustainable development and the environment are recommended by the
Committees in para. 2.64(ii), and listed in para. 2.35. The cost of
implementation is at US$ 900,000 per biennium, but it needs to be
emphasized that this will allow only a start to be made. The ultimate
costs will be very much higher in certain cases. For instance, one of
the new activities to be undertaken is defined as "strategies for
sustainable agriculture in areas with different resource endowments
and the choice of appropriate technologies". The estimate allows only
for work on methodology. The actual preparation of such strategies
for specific areas would, of course, involve expenditures of a quite
different order of magnitude.

31. In a broader context, the Committees have recommended in para.
2.64(ii) that FAO actively promote sustainable development aimed not
only at conserving natural resources, but at improving them with a
view to their rational exploitation for the benefit of agricultural
and rural development, particularly in developing countries. No
reorientation is required, since this is the spirit in which FAO has
been working for many years. It may, however, be useful to bring the
Organization's activities for sustainable development into sharper
focus. One possible way, mentioned below, would be the creation of a
Special Action Programme for this purpose.

32. The Committees analyse problems relating to WCARRD, women and
youth in paras. 2.36-2.37 and in 2.47, and set forth their recommend-
ations in para. 2.64(vi). The Committees point out that the proposed
evaluation of the results of WCARRD should be decided upon in agree-
ment both with Member Nations and also with the other UN agencies
concerned. If the Committees' recommendation is approved by the
Conference, the Director-General will arrange for the matter to be
pursued at the next meeting of the ACC Task Force on Rural Develop-.
ment, in which all these agencies are represented. The cost of the
evaluation is estimated at US$ 240,000.

- ix -

33. The Committees recommend pursuit of efforts on behalf of wojen in
rural development, and increased efforts to assist young farmers and
to create non-farm employment. A Plan of Action for the Integration
of Women into Agricultural and Rural Development, endorsed by the
Council, will be before the Conference for approval at its forthcoming
session (document C 89/14 and C 89/14-Sup.l). Presumably the Con-
ference will wish to take action on this matter under the relevant
agenda item rather than in the context of the Review.

34. Efforts to assist young farmers are already being made, and can
be stepped up in the framework of activities directed at rural youth.
Regarding non-farm employment, FAO can of course only promote forms of
activity related to agriculture. There is certainly much that can be
done within the agricultural sector, but the Director-General believes
that there is much greater promise in a broad approach that could
include such components as rural industries or agri-tourism. 'This is
exactly the scope of rural development programmes, which bring in all
sectors that could contribute to the development of a particular area.
The Director-General therefore suggests promoting this recommendation
in association with other agencies in the context of rural develop-
ment.

35. Regarding international trade, the Committees have recommended in
para. 2.64(iv) that FAO provide positive assistance to developing
countries in their negotiations in GATT, and speak out against protec-
tionist measures and other practices which hinder trade of products,
especially those adversely affecting developing countries and dis-
couraging producers in these countries. The recommendation does not
involve undertaking any new line of work, but rather a stepping up of
ongoing activities. The Director-General estimates the cost at
US$ 30,000 per biennium. However, this needs to be looked at in
conjunction with the new work arising out of the Uruguay Round of
Multilateral Trade Negotiations in GATT, mentioned by the Director-
General in para. 12 above, which is estimated to cost US$ 900,000 per
biennium.

36. Planning, programming and budgeting in FAD The Review, in the
opinion of the Director-General, has been useful in articulating the
requirements of Member Nations for an improved planning and pro-
gramming process in FAO.

37. The revised process which is emerging from the Review consists of
the following elements: a long-term strategy for food and agricul-
ture, a medium-term plan for the Organization, and a three-stage
Programme of Work and Budget (the Outline as prepared for the first
time this year, the Summary, and the full PWB). The Committees have
recommended that the strategy consist of the FAO input to the broader
International Development Strategy to be approved by the General
Assembly of the United Nations, that the medium-term plan cover a
six-year period, and that the procedure for an Outline of the Pro-
gramme of Work and Budget be continued for at least another biennium
so that its value can be judged over a longer time period. An issue
which is left open is the extent to which the medium term plan should
indicate resource levels, and the degree in which approval of the
medium term plan would involve a commitment by the membership.
regarding the size of the budget for the three future biennia covered.

38. In the view of the Director-General, the task for the Secretariat
will be to ensure that the linkages between these various elements and
stages are as clear as possible, that repetition and duplication are
avoided as far as possible, and that throughout the process informa-
tion is provided to Governments in a usable and intelligent manner.
As the Committees have noted, this is an area in which increasing the
quantity of the data made available may not increase and may
actually reduce its practical usefulness to Governments. Close
consultation with the Programme and Finance Committees will therefore
be needed before preparations are started on the next biennial cycle,
for 1992-93. Over the longer term, if the Outline is maintained the
Director-General believes that the Summary Programme of Work and
Budget will be unnecessary.

39. The extra cost of the new arrangements is estimated at
US$ 600,000 per biennium, including additional staff and documentation
costs. The figure does not include any cost for the time of technical
officers engaged on the preparation of the medium-term plan.

40. Priorities and the PWB As the Experts and the Committees have
pointed out (para. 2.54), the definition of priorities is a long and
elaborate process in an organization like FAO. It involves specia-
lized bodies in the many technical fields covered by the Organization,
regional conferences and committees, the Programme and Finance Commit-
tees, the Council and Conference. It must take account also of events
outside FAO, and in particular the recommendations emanating from the
United Nations Economic and Social Council and General Assembly.

41. The Committees have put forward a set of guidelines, based on the
work of the Experts, which FAO Member Nations and Governing Bodies
could usefully bear in mind during the process (para. 2.54, reiterated
in para. 2.64). The Director-General has no difficulties with these
guidelines, which will of course also be observed by the Secretariat.

42. The Director-General strongly endorses the views of the Commit-
tees (para. 2.56) on the great difficulty of a straightforward ranking
of priorities. Experience has shown many times that, while it is
relatively easy to agree on the positive things that should have a
high priority, it is extremely hard to reach agreement on activities
that should have a lower priority.

43. Special Action Programmes The Director-General welcomes the
Committees' support for the establishment of a small number of new
Special Action Programmes (SAP's) covering areas of high priority
(paras. 2.60 and 2.64(x)). No specific proposal for new SAP's is
advanced. One possible area might be sustainable development. Any
decision to launch a new Programme would need to be carefully prepared
by the Secretariat and the technical and governing bodies of the
Organization. Since the SAP's are largely dependent on Trust Fund
contributions, it would be essential that donors confirm their readi-
ness to support a new SAP before it is launched. The Regular
Programme would normally be expected to fund the core staff respon-
sible for organizing and coordinating a new SAP, and the financial
implications for the Regular Programme would need to be worked out on
a case-by-case basis in advance. The issue is whether the Programme
could be organized and maintained by existing staff or whether it
would require additional personnel.

- X -

- xi -

Comments on Chapter 3 FAO Field Operations

44. The Director-General welcomes the manner in which the Committees
have expressed the importance of field operations, both for Member
Nations and for the Organization itself (paras. 3.1-3.4).

45. In commenting on the recommendations in this chapter, the
Director-General follows the order in which they are summarized by the
Committees in paras. 3.48-3.54.

46. Review of field operations by Governing Bodies The Committees
recommend in para. 3.51(i) that the content and orientation of field
programmes be reviewed regularly in the technical committees, in joint
sessions of the Programme and Finance Committees, and in the .Council.
In the view of the Director-General, particular care will be needed to
ensure that the papers for this review are geared to the practical
needs of participants in the meetings. For instance, they should
avoid overwhelming delegations with indigestible data on the field
programme. The first cycle of discussions in the technical committees
might be considered as experimental in character.

47. Secondly, policy issues and questions concerning relations with
financing agencies and other sources of external assistance should be
reviewed regularly by the Council (para. 3.51(ii)). This would be a
development of the discussions on operational questions which have
taken place in the Council during recent years.

48. The cost of these recommendations is estimated at US$ 200,000 per
biennium in terms of staff time and expenditure for documentation.

49. Field Inspection Unit The Director-General notes the proposal
that a Field Inspection Unit be established as part of the Evaluation
Service, to focus mainly on project management and organization. The
Unit would be expected to contribute to documentation for the
Governing Body review of field operations. However, since the Unit
would not be concerned with the technical content of projects, it
could hardly contribute towards discussions in the technical commit-
tees, and it would rather provide an input to the documentation for
the review in the Council. Moreover, in the Director-General's view,
it would be premature to decide on the location of the Field Inspec-
tion Unit within FAO before its detailed Terms of Reference have been
developed. Indeed, care would have to be taken to ensure that. there
is no duplication with the other units which already exist in the
Organization.

50. The cost of the Field Inspection Unit is estimated at US$ 680,000
per biennium. The purview of the Unit would relate mainly to activi-
ties financed from extra-budgetary sources, and the Unit itself should
therefore be financed partially outside the Regular Programme.

51. Additional project officers and technical backstopping staff The
Committees, drawing on the work of the Group of Experts on FAO's Field
Operations, have pointed out (para. 3.17) that the workload of both
project officers and technical staff supporting projects is "too often
excessive". They have recommended (paras. 3.18 and 3.52(v)) that
additional project officers be appointed as an immediate ameliorative
measure, and that technical backstopping staff be increased. The

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problem is an old one, which is worsening as projects become smaller
and more complex, and as operating costs rise ever higher above the
level of reimbursement received by the Organization. The Director-
General is ready to implement short-term measures of relief as a
priority matter.

52. The Group of Experts on FAO's Field Operations recommended the
immediate appointment of additional project officers, and the cost was
estimated at US$ 2,600,000 per biennium for 12 officers. The Commit-
tees have supported this recommendation but have felt that an increase
in technical backstopping staff is equally necessary. The Director-
General suggests that the appointment of six additional technical
officers be envisaged, at a cost of US$ 1,300,000. The total cost for
both project officers and technical officers would then come to
US$ 3,900,000 per biennium.

53. Project identification/formulation facility The proposed
facility is described by the Committees in para. 3.26 of their report,
and by the Group of Experts on FAO's Field Operations in their para.
74(m). In the view of the Director-General this is one of the most
valuable recommendations to emerge from the Review, and would greatly
increase FAO's flexibility and usefulness. It may be underlined that
the facility would not be restricted to identifying and formulating
projects for implementation by FAO. For instance, in connection with
Special Action Programmes it may often be desirable for projects to be
prepared by FAO and then taken over by a donor which implements them
directly with the government concerned.

54. The essence of the proposal is that expenditures incurred by FAO
would be reimbursed when project funding was secured, so the ultimate
cost to the Organization would be limited to the preparation of
projects which did not find a sponsor. The initial amount required
for the facility is estimated at US$ 1 million, to be sought from
extra-budgetary sources.

55. Technical Cooperation Programme The Director-General welcomes
the Committees' positive evaluation of the TCP, and their recommenda-
tion that it be "maintained in its present form as a vital element in
FAO's field operations". He will be ready to contact donors regarding
possible additional contributions on a voluntary basis, either to TCP
or or through trust funds.

56. Role of the Investment Centre The Committees feel that the work
of the Investment Centre "deserves the strongest support of Member
Nations". The Director-General agrees with this verdict, and will do
everything possible to strengthen the World Bank Cooperative Programme
as recommended.

57. Cooperation with NGO's The Director-General agrees with the
Committees' and the Experts' assessment of the increasing importance
of non-governmental organizations. The Committees have recommended in
para. 3.52(ix) a review of the present administrative and financial
procedures guiding FAO's cooperation with NGO's with a view to streng-
thening that cooperation. This recommendation runs along the lines of
a proposal made by the Director-General, as mentioned by the Commit-
tees in their para. 3.47. The Director-General will be glad to carry
out the review in 1990 as he had suggested, submitting the report to
the Programme and Finance Committees and Council.

- xiii -

58. Role of Country Offices The Committees recommend that ways be
found to decentralize administrative support tasks to the Country
Offices, and to enlarge and equip them not only for this purpose but
also so that they can serve as interlocutors for governments and other
institutions on matters relating to agricultural policy and agricul-
tural and rural development programmes (paras. 3.33-3.37, 3.53(x) and
3.53(xi)). The Committees have given some general guidelines for the
ways in which the Offices should be strengthened, but they feel that
such measures could only be fully effective if a solution is found to
the overall problem of inadequate administrative and financial
resources.

59. The Director-General proposes to implement these recommendations
progressively over several biennia. The precise measures to- streng-
then individual Offices would be determined case by case.

60. The Director-General foresees an expenditure of US$ 2,000,000 per
biennium for strengthening ten Country Offices to play a role in
policy analysis and advice. In order to support field activities, the
cost would be US$ 2,250,000 per biennium for the outposting of a
Programme Officer in 15 Offices. For improving telecommunications and
computer facilities, there would be an expenditure of US$ 800,000 in
the first biennium and US$ 240,000 in subsequent biennia.

61. Computerization While recognizing that it will not solve the
basic problems of the Field Programme, the Committees feel that "a
relatively modest investment in computerization is fully justified and
should be given the highest priority" (para. 3.14). They recommend in
para. 3.53(xiii) the development of computerized management systems
for use in administration as well as in field programme monitoring.
The Director-General believes that it should be possible to introduce
the planned project information and monitoring system (PROSYS) in the
near future. The cost is estimated at US$ 1,730,000 in the first
biennium and US$ 1,270,000 in the second biennium. The Director-
General hopes that, as suggested by the Committees, resources might be
found from extra-budgetary sources for this purpose.

62. Training of national staff In considering government execution
of projects, and the need to strengthen the capacity of many deve-
loping countries to carry out projects themselves, the Experts and the
Committees have recommended that FAO provide more training for
national personnel in project identification, formulation, management
and monitoring and evaluation (paras. 3.19 and 3.53(xiv)). The
Director-General considers this a highly significant recommendation.
He estimates that a new programme along the lines of work already
carried out in the past could be set in train for US$ 1,100,000 per
biennium. This would provide training for 10 people in project
formulation and appraisal, and 100 people in project management and
monitoring.

63. The overall situation of FAO in the field In a general recommen-
dation (para. 3.54(xv)) the Committees call for FAO to be recognized,
on the basis of its comparative advantage and its experience, as the
lead agency and coordinator for sectoral and sub-sectoral reviews in
its field of competence. It should be fully associated in the process
of preparation and holding of multilateral coordination meetings such
as the UNDP Round Tables and World Bank Consultative Groups as well as

- xiv -

with UNDP-sponsored national technical cooperation assessment pro-
grammes so that it can provide its essential technical contribution.
Mutual understanding and rapport among the UN agencies should be
strengthened.

64. The Director-General strongly supports this recommendation.
However, he feels that if it is to be fulfilled, Governments must take
the same line on the role of FAO both in the Organization's own
Governing Bodies and in the corresponding bodies of the other organi-
zations concerned. Strengthening mutual understanding and rapport
requires an effort by all parties involved, and as far as FAO is
concerned the Director-General and the staff are ready to make it.
The problem areas are dealt with in the next chapter of the
Committees' report, and the measures suggested there will certainly
help. In order to keep the full respect of other organizations, it is
also important that FAO achieve continuous improvements in the imple-
mentation of its field programme. Here again, the Review has led to a
number of recommendations that could be helpful. There remains,
however, a troublesome problem which is evoked in the following
paragraphs.

65. Conditions of employment The Director-General would like to take
up a point made by the Committees in para. 3.13 but not the subject of
a specific recommendation. This is the problem created by the gradual
decline in conditions of employment in the United Nations system as
compared with conditions elsewhere. Although mentioned in the context
of field operations, it is equally important for the Regular
Programme.

66. No matter how many times he has said it in the past, the
Director-General would like to repeat that the unattractiveness of
United Nations scales of salaries and allowances is undermining FAO
and other multilateral organizations. In the field, an expert from
one of the major industrialized countries is likely to obtain much
better conditions working for a bilateral programme, the World Bank or
the EEC. For work at Headquarters, a candidate who is in mid-career
with a family is all too frequently discouraged by the financial
situation in which he would find himself if he came to Rome. For both
the shorter and the longer term, it is essential that the UN system
again become competitive. As the Committees observe, Member Nations
will have to address the problem on a system-wide basis. It is urgent
that they do so now.

67. Staff training Before leaving Chapter 3, the Director-General
would like to evoke an issue which figures in para. 74(i) of the
report of the Group of Experts on FAO's Field Operations but which has
not been taken up by the Committees. This is the desirability of
providing technical staff with opportunities to update their knowledge
and skills. Technology continues to develop with extraordinary
rapidity. There are two ways in which an organization like FAO can
cope with this fact: it can employ technical experts on a relatively
short fixed-term basis, so that it is continually recruiting fresh
people from outside who bring with them the latest knowledge; or it
can have a regular staff with career opportunities and arrange for
them to be brought up to date from time to time in their specialized
fields. FAO does neither one nor the other. It can no longer afford
to recruit new experts systematically, as just explained above. And
it currently has no provision for refresher training for regular
staff.

- XV -

68. The Director-General therefore proposes that, as part of the
Review, the Organization make provision for technical staff to update
their knowledge. This generally cannot be done through short or
superficial courses. A six-months' sabbatical is suggested, and it is
expensive, especially if a temporary replacement has to be found while
the staff member is away. The estimated cost is US$ 70,000 per
person, or US$ 4,200,000 in a biennium for 60 people.

Comments on Chapter 4 FAD in the International System

69. The Committees have noted that cooperation with other agencies
proceeds on a very broad front, and in general is "rather good". They
have advanced recommendations for improving collaboration in a few
specific cases.

70. Before giving his comments on the recommendations of the Commit-
tees, the Director-General would like to mention one general point.
For over a decade, there have been four UN bodies in Rome dealing with
food questions. FAO and IFAD are specialized agencies, WFP is a
programme jointly sponsored by the United Nations and FAO, and the
World Food Council is an organ of the UN General Assembly with its own
Secretariat. The relations between these four bodies inevitably vary
over time. Even when they are at their best, there is still a need
for more systematic consultation than has generally taken place in the
past.

71. In order to foster such consultation, the Director-General wishes
to suggest the creation of an inter-secretariat mechanism among the
Rome food agencies, to function at senior working level. Meetings,
which might be held every six months, could be hosted by the four
bodies in turn. The emphasis should be on questions of substance, and
issues of protocol or procedure should be avoided. The objective
should be to ensure that information is shared, initiatives are
coordinated, and the best possible use is made of limited resources.
Needless to say, a mechanism of this nature could only be established
if all four bodies agree to it. If the idea receives the endorsement
of the Council and Conference, Governments should be ready to advocate
it in the other fora involved.

72. The following comments relate to the Committees' recommendations
on relations with individual agencies, as listed in para. 4.14.

73. World Bank Arrangements for periodic consultations have now been
made, and at the time of writing the first such consultation is being
prepared.

74. UNEP The Committees recommend consultations aimed at the
harmonization of work programmes and the reinstitution of the system
of joint programming. Some informal consultations with UNEP have
already taken place. The Director-General proposes to take the matter
up formally with the Executive Director of UNEP in the light of the
Conference decision on this recommendation. He wishes to add,
however, that consultations at secretariat level will not necessarily
resolve all the problems identified by the Experts and the Committees.
It is important that Governments take fully compatible and coordinated
decisions in both UNEP and FAD.

- xvi -

75. UNICEF The Committees recommend steps to strengthen collabora-
tion at the country level between FAORs and UNICEF representatives.
As soon as the Conference has completed its work on the Review, the
Director-General will take up with the Executive Director of UNICEF
the possibility of formulating parallel instructions to the two sets
of representatives in order to intensify cooperation.

76. WFC The problem identified by the Experts and the Committees
relates to activities on national food security policies. Consulta-
tions between FAO and WFC to resolve this issue have been held, and
good progress is being made.

77. UNDP The Committees recommend a meeting at least once a year
between senior officials of FAO and UNDP to resolve outstanding
problems. Annual meetings at senior level have, in fact, already
started and the Director-General does not see any problem in carrying
out this recommendation. Secondly, the Committees recommend that
consultations between UNDP Resident Representatives and FAO
Representatives be reinforced in order to solve issues on the spot.
If the Conference approves this proposal, the Director-General will be
happy to take the necessary steps.

78. UNIDO High-level consultations are recommended in order to
ensure first of all the effective functioning of the 1969 agreement,
and in order to study the possibility of creating an FAO/UNIDO
Division of Agro-Industrial Development. The Director-General will
take the matter up with the Director-General of UNIDO when the
Conference has adopted a decision on the matter. He wishes to point
out, however, that this is another area where it is indispensable to
have coordinated and compatible decisions by Governments in the
respective fora.

79. WFP The Committees have recommended that cooperation between FAO
and WFP-be reinforced, and that overlapping be avoided. They have
particularly mentioned overlapping in the area of food aid policies
(para. 4.12). The Director-General endorses the recommendation of the
Committees.

Comments on Chapter 5 The Resource Dimension

80. New issues Before coming to the cost of implementing the
recommendations of the Committees, the Director-General would like to
revert to the new issues which he has mentioned in paragraph 12 above.
While no preparations can yet be made for possible new work in Eastern
Europe, there are strong reasons for the Organization to start getting
ready in the next biennium to handle the new responsibilities that are
expected to arise out of the Uruguay Round of Multilateral Trade
Negotiations in GATT. The Committees, like the experts, have stressed
that FAO should play as active a role as possible in the area of
international trade. The arrangements currently envisaged will call
for a major technical input from the Organization to a process which
will be of benefit to all member countries, and the Director-General
considers it essential that FAO be in a position to respond positively
and urgently. On a biennial basis, the cost can be estimated at a
minimum of US$ 600,000 in connection with the International Plant

- xvii -

Protection Convention, and US$ 300,000 in connection with the Codex
Alimentarius Commission, for a total of US$ 900,000 per biennium.

81. This question has come up since the Programme of Work and
Budget was prepared, and consequently there is no provision for the
necessary expenditure in 1990-91. Like the recommendations arising
from the Review, it is oriented towards the future. The Director-
General is therefore including the estimate for extra expenditure on
cooperation with GATT in this document alongside the estimates for
implementing the recommendations of the Review.

82. Options for financing expenditure in 1990-91 The Committees have
advanced three options for a solution in the next biennium: a special
supplementary appropriation; programme adjustments; and the mobiliza-
tion of extra-budgetary funds.

83. In the light of these options, the Director-General proposes
on the next page a division of costs into the following three
categories:

1. Expenditures for possible funding by the Regular
Programme, which he considers to have priority and
which should be started during the coming biennium
provided funding can be assured;

2. Expenditures for possible funding by the Regular
Programme, but which could be considered as less
urgent or of lesser priority;

3. Expenditures which would normally be financed from
extra-budgetary sources.

84. This division of costs is put forward for discussion. It will be
for the Council and Conference to take the final decisions. The
Committees have suggested that the three financing options may be
envisaged alone or in combination; the Director-General would add that
only the first -a supplementary appropriation-would offer the
certainty that all of the recommendations could be implemented without
serious and highly undesirable disruption of the Organization's
programmes and activities. In no case could the Director-General
advocate covering expenditures of the magnitude envisaged through
programme adjustments, and the. availability of extra-budgetary funds
cannot be taken for granted.

85. It will be recalled that the commissioning of the reports of the
management consultants was not called for under Conference Resolution
6/87.

86. The Director-General submitted his Preliminary Comments on the
reports of the management consultants to the Third Special Joint
Session of the Programme and Finance Committees, and Supplementary
Information and Views to the Fourth Special Joint Session. After
consideration of the Committees' report, the following are the
Director-General's conclusions on the reports of the management
consultants.

General Comments

87. The Director General has in many cases reached positive con-
clusions on the recommendations of the various management consultants.
As part of his constitutional responsibility for managing the Organi-
zation, he has already initiated action within existing allocations.
In some cases, he has given indications of his views or intentions
regarding possible future studies of measures, subject to availability
of resources. In others, he is not convinced of the case for follow-
up, at least in the immediate future, particularly having regard to
the Organization's freedom of manoeuvre, e.g. in such matters as the
Common System, or to administrative and financial feasibility.

88. In this connection, the Director-General would emphasize that in
view of all the economies that have been effected since he assumed
office in 1976, the fact is that except for the report on Printing,
the reports have not revealed any major source of over-expenditure of
resources where savings could be made. Indeed, if all the recommenda-
tions were -to be implemented, the additional costs would absorb
several times the amount of the potential savings from the changes in
the Printing area. Some recommended measures would involve the estab-
lishment of additional, continuing posts, and the total of 57 studies
which are recommended throughout the various reports would involve a
vast outlay in the fees of management consultants, and heavy staff
costs for researches by many existing staff already overburdened with
important tasks, to deal with changes in or documentation of proce-
dures or methodology.

89. The Director-General wishes to express his appreciation for the
views of the Programme and Finance Committees and has no difficulty in
associating himself with them. He intends therefore to continue
implementation of the measures already begun and pursue his analysis
of other recommendations as and when resources permit, and will of
course as appropriate report or submit proposals to future regular
sessions of the Finance Committee.

90. It therefore does not seem necessary for the Director-General to
submit a further large, comprehensive, detailed document on all the
recommendations of the management consultants. There is however one

.... 11, I .

XX -

important issue on which the two Committees did not make any specific
recommendation but which will inevitably come before the forthcoming
sessions of the Council and Conference, and on which therefore the
Director-General considers it would be appropriate to recapitulate his
views for the consideration of the Governing Bodies.

91. The issue is the methodology for adoption of a rate
ting the approved budget level. The Director-General
submits his detailed views on this issue in Annex I.

for calcula-
accordingly

- xxi -

ANNEK I

The Director General's Comments on
The Methodology For Adoption of the Budget Rate

1.1 Since the greater part of the Organization's Regular Programme
expenditures are made in Italian Lire, it is necessary for the purpose of
deciding an approved budget level to make an assumption about the relation-
ship of the currency in which the budget is expressed, hitherto always the
US dollar, to the Italian currency, i.e. the US$/Lit rate. For many
biennia, the rate used has been the spot rate on the day of the vote on the
PWB resolution.

1.2 However, concerns have sometimes been expressed, mainly during the
Conference, about this in relation to:

(i) the effect, which is an immediate but not necessarily lasting
one, of the approved US$/Lit rate on the budget level;

(ii) the effect, which is seen only after two years but could be
much greater than in the case of (i), of actual rates during the
biennium on the eventual debits/credits to the Special Reserve
Account (SRA);

(iii) the programme cuts, which sometimes have to be made, during the
biennium but have long-term effects on the programme, because the
Special Reserve Account may not be large enough to absorb the full
losses arising from adverse currency developments during the
biennium.

1.3 Although member countries may give different emphasis to each of the
above, the three factors are in fact inter-related. A rate which is too
"pessimistic" in relation to experience may exaggerate the budget level for
a short period but will result eventually in gains being accumulated in the
Special Reserve Account and eventually returned through the Cash Surplus to
Member Governments. A rate which proves to have been "optimistic" will
reduce the approved budget level but in practice will result in withdrawals
from the Special Reserve Account and when the latter is exhausted, in
programme cuts, while Member Governments will not benefit from a contribu-
tion from the SRA to the Cash Surplus. Indeed, additional assessments may
be required to replenish it.

1.4 Thus, the gains over and above the replenishment level of the SRA
contributed substantially by US$ 1.1 million in 1980-81, US$ 13.7 million
in 1982-83, US$ 9.8 million in 1984-85, to the Cash Surplus which even-
tually was returned to Member Governments in offset of their subsequent
contributions. Whereas, as regards the PWB for 1986-87, exchange losses
amounted to US$ 31.3 million, of which only US$ 21.9 million could be
absorbed by the Special Reserve Account and US$ 9.4 million had to be
absorbed within the approved PWB. However, the Director-General strongly
feels that this experience is not to be regarded as the norm.

1.5 With this experience in mind, the management consultants made the
suggestion that instead of using the spot rate on the day of deciding the
budget level, the Conference could set the US$/Lit rate by reference to the
9 or 12 months forward rates. (Using forward purchases of lire to reduce

- xxii -

foreign exchange exposures after adoption of the PWB is a separate
question).

1.6 Forward rates: However, as the report itself indicates, such forward
rates simply constitute a view by the market of future events. Forward
rates are based primarily on interest rate differentials affecting the
value of the US dollar against other currencies. In recent biennia, the
forward lira rate has been more favourable to the US dollar than the spot
rate, because historically lira interest rates have been higher than
contemporary US dollar interest rates. However, it cannot be assumed that
this situation will continue indefinitely, and in any case, actual rates
during the course of the recent biennia have shown big differences,
positive and negative, from the forward rates at the time of the respective
Conference decisions.

1.7 Average rates: A different alternative to continued use of the spot
rate on the day of decision, i.e. use of the average rate over a past
period of one year or less, was not covered in the report of the management
consultants, but has been the subject of isolated suggestions in other
discussions. These have never been substantively discussed, but examina-
tion immediately reveals a number of inherent difficulties therein.
Firstly, difficulties would inevitably arise over what should be the period
over which an average rate should be calculated i.e. how far any such
past period could be regarded as representative of future currency develop-
ments. This problem is illustrated by the following table, which also
shows the relationship of past averages to the corresponding spot rates,
forward rate, actual average rates in the ensuing biennium and corres-
ponding budget levels.

Comparison of Rates/Budget Levels

End 1985/Level 86-87* End 1987/Level 88-89
Lit. US$ Lit. US$

Average 3 months preceding 1 874 / 431m. 1 326 / 483m.
Conference

Average 6 months preceding 1 941 / 427m. 1 313 / 485m.
Conference

Spot rate on day of decision 1 760 / 437m. 1 235 / 492m.

Forward rate 1 776 / 435m. 1 242 / 491m.

Actual average 1986-87 1 406 / 450m. n/a

Actual Average 1/1/1988 -
30/6/1989 n/a 1 343 / 482m.

Budget level in US$ million
** 3 months forward rate on 1 December

- xxiii -

1.8 It will be evident from these figures that:

(i) the Conference could have spent much time and had much diffi-
culty in agreeing, at the point of adopting the PWB resolution,
either to adopt a past average rate or to agree upon the period to be
used for the average.

(ii) for 1986-87,

(a) the forward rate was nearer, although only marginally so, to
actual experience than past averages, but both were further from the
actual average achieved than the spot rate actually adopted;

(b) the various budget levels implied by any of the past average,
spot or forward rates were close together but a long way from the
budget level implied by the actual average achieved, could the latter
have been foreseen two years previously; but

(c) as indicated in para.4 above, the result was that the programme
had to be cut by US$ 9.4 million;

(iii) for 1988-June 89,

(a) the spot rate and the forward rate were quite close, but
average past rates would have been the nearest to the actual average
up to 30 June 1989;

(b) the corresponding budget levels resulting from the spot rate
and the forward rate were much the same, but use of the past average
would have produced a budget level similar to that implied in the
actual experience with rates during the biennium so far; but

(c) if the past average had been adopted, far less would have been
accruing to the Special Reserve Account than the total of approxi-
mately US$ 10 million which now seems likely.

1.9 However, all this is only obvious in hindsight and experience in
neither biennium is necessarily indicative of what will happen in future
biennia. The fact is that the use of a past average or a forward rate
average would simply be "playing the market" from different viewpoints, but
neither would necessarily be more reliable as regards what was going to
happen than the spot rate.

1.10 Experience with the spot rate: The Director-General considers
therefore that experience over several biennia of using the spot rate on
the day of decision coupled with the protection afforded either way by the
Special Reserve Account is clear and unequivocal and overall has served the
Organization as well as could be expected in a period of considerable
currency instabilities.

1.11 Looking ahead, it would seem undeniable that unless and until real
stability in the currency markets can be firmly established and maintained
by the great financial powers, no past period nor the current period nor
any future period can be regarded as necessarily more representative or
necessarily more advantageous than the spot rate for use in determining the
FAO budget level. The spot rate simply offers the simplest and the least
controversial chance, and so long as resort can be had to an adequate
Special Reserve Account, the best method for adopting the currency rate to
be used in determining the budget level.

REPORT OF THE PROGRAMME AND FINANCE COMMITTEES

Page

Foreword -

Part I

Part II -

Modalities of Implementation of
Resolution 6/87

FAO's Objectives, Role, Priorities and
Strategies and FAO's Field Operations

FAO Management Review

- 1 -

Foreword

Modalities of Implementation of Resolution 6/87

1. This report contains the "conclusions and recommendations" of the
Programme and Finance Committees arising from their joint review of
"certain aspects of FAO's goals and operations", which they carried out in
1988-89 as required by Resolution 6/87 of the Twenty-fourth Session of the
FAO Conference.

2. The report of the Committees is to be submitted by the Director-
General, "together with his views and comments", to the FAO Council, "which
will transmit it, together with its views, to the Twenty-fifth Session of
the Conference".

3. To implement the resolution, the Programme and Finance Committees
held in Rome, in 1988 and 1989, four Special Joint Sessions.

4. During the first of these sessions, which took place from 16 to 24
May 1988, they approved the proposal by the Director-General to extend the
scope of the Review to include field operations and certain administrative
questions. The Committees firstly defined terms of reference for the
studies on FAO's Objectives, Role, Priorities and Strategies and on FAO's
Field Operations, and then, in accordance with Resolution 6/87 and in
consultation with the Director-General, selected a Rapporteur and experts
to carry out each of the studies:

5. During the same session, the Committees examined the question of the
programme budget process and decided on the principle of an Outline of the
Programme of Work and Budget 1990-91, to be examined by the Committees in
January 1989 (cf. 2.63).

6. During their Second Special Joint Session on 22 23 September 1988,
the Committees received oral reports from the Rapporteurs of the two groups
of experts and discussed with them their respective terms of reference.
They established February 1989 as the date for submission of the experts'
final reports. They were also informed of the international tender issued
for the management review, as well as of the terms of reference and
schedule for the studies. Finally, the Committees decided to submit a
progress report on the Review to the Ninety-fourth Session of the Council.

-2-

7. During their Third Special Joint Session from 18 to 26 May 1989, the
Committees examined the experts' reports on FAO's objectives, role, priori-
ties and strategies and on FAO's field operations, along with the corres-
ponding report of the Director-General. They also considered the executive
summaries of the management consultants' reports, along with the prelimi-
nary comments of the Director-General. They questioned and obtained clari-
fications to their satisfaction from the Rapporteurs and the Secretariat,
and they had comprehensive in-depth discussions on all issues related to
the Review. The Committees welcomed the contribution made by the two
expert groups. They thanked the two Rapporteurs for the completion of the
work by the experts. They requested the Chairmen of the Programme and
Finance Committees to prepare preliminary draft reports. It was decided
that these would be examined first by a Drafting Support Group to identify
the points of agreement, the points that would require further debate, and
possible amendments. Finally, the Committees decided to submit a progress
report to the Ninety-fifth Session of the Council.

8. The Drafting Support Group met in Rome from 29 August to 4 September
1989, following which revised versions of the Chairmen's draft reports were
prepared for the Fourth Special Joint Session. During this session, which
took place from 18 to 22 September 1989 with a final meeting on
28 September, the Committees considered and adopted the "final conclusions
and recommendations" which are contained in this report.

9. The Committees have implemented Resolution 6/87 in as open and
constructive a manner as possible: in widening the scope of the Review, as
proposed by the Director-General, to include field operations and
administrative/management questions; in calling on two groups of experts
with a broad composition (eight and five experts for the first and second
groups respectively), and on three external management consultant firms;
in giving the experts and the consultants very wide terms of reference and
in requesting them to submit substantive reports of which the Committees
have considered most carefully in formulating their own conclusions and
recommendations. The Committees are satisfied that the experts carried out
their tasks independently. The Committees have also reported regularly to
the Council on progress in their work.

10. Detailed briefing sessions were organized by the Secretariat on
issues arising from the terms of reference of each of the groups of
experts, who had access to all necessary documentation. The experts
received from the Director-General and Secretariat officials all the
required support and cooperation and obtained all the supplementary infor-
mation requested. Experts from Group I had discussions with other insti-
tutions: United Nations Environment Programme (UNEP); World Bank; Inter-
American Development Bank; International Food Policy Research Institute
(IFPRI); United Nations (UN); United Nations Development Programme
(UNDP); United Nations Children's Fund (UNICEF); United Nations Fund for
Population Activities (UNFPA); United Nations Industrial Development
Organization (UNIDO); International Atomic Energy Agency (IAEA); World
Health Organization (WHO); International Labour Organisation (ILO);
General Agreement on Tariffs and Trade (GATT) and United Nations Conference
on Trade and Development (UNCTAD); International Fund for Agricultural
Development (IFAD); World Food Council (WFC); and the World Food
Programme (WFP). Experts from Group II also consulted with the World Bank,
the UN, UNDP and other UN agencies and programmes in New York, and carried
out country visits in Brazil, China, Ethiopia, Senegal and Turkey where
they were able to have discussions with governments, FAO Representatives,
project personnel, national project coordinators, other UN system

-3-

representatives, as well as representatives of other aid agencies and non-
governmental organizations. They also visited the International Centre for
Agricultural Research in the Dry Areas (ICARDA) (Aleppo, Syria) and the FAD
Regional Offices for Latin America and the Carribean (Santiago, Chile), and
for Asia and the Pacific (Bangkok, Thailand).

11. The reports of the experts and the management consultants have con-
stituted a substantial input to the Review. The report of Group I covers
the following points:

the evolution of world food and agriculture in the 1990s and
beyond;

FAO's major objectives and roles;

FAO's global and regional strategies and their relevance;

the process of priority setting and budgeting;

institutional capacity and adjustment; and

FAO in the international system.

The report of Group II covers the following points:

scope and composition of FAO's field operations;

outlook for FAO's field operations in the future; and

factors affecting FAO's field operations and approaches to
address them.

The management consultants produced six reports plus executive summaries
covering:

printing systems;

treasury operations;

conceptual review of accounting policies and procedures;

conceptual review of personnel policies and practices;

computer facilities management feasibility study; and

review of maintenance and security services.

12. In addition to the preliminary documentation prepared by the
Secretariat for the Review, the Committees considered the Director-
General's views on the recommendations of the experts, his estimate of the
cost implications of these recommendations, and both his preliminary
comments, and supplementary information and views on the reports of the
management consultants.

13. At the outset of their work the Committees had been informed of the
likely cost of the Review (US$ 2.4 million) and had approved recourse to
the Special Reserve Account up to US$ 1.8 million, with the balance met
from the provision for contingencies in the Programme of Work and Budget
1988-89.

-4-

14. At the conclusion of their work, the Committees received a report on
the costs incurred. The Committees expressed satisfaction that every
effort had been made to limit the costs to a significant level below the
initial estimates. The Committees were informed of the FAO Secretariat
support costs, conservatively estimated at US$ 1 million. It was noted
that costs had also been incurred by other organizations contacted or
involved in the Review, as well as by Member Nations individually.

15. Thanks to the documents prepared by the Secretariat, the reports of
the experts and consultants, and the reports and views of the Director-
General, the Committees have been able to carry out a broad and in-depth
review of FAO's goals and operations. In order that all Member Nations may
benefit from the information in these documents, the Committees append to
their own report the following:

SJS 1/4: FAO's Role, Priorities, Objectives and Strategies -
Preliminary Examination of Issues and Annex I: The
Possible Evolution of World Food and Agriculture up
to the End of the Century and Beyond

SJS 3/2: Reports of the Experts FAO's Objectives, Role,
Priorities and Strategies and FAO's Field Operations

SJS 3/3: Report of the Director-General FAO's Objectives,
Role, Priorities and Strategies and FAO's Field
Operations

SJS 4/3: Supplementary Information and Views of the Director-
General on the Reports of the Management Consultants

SJS 4/4: Cost of the Review of FAO

16. The greatest effort has been made by all to clarify the debate, to
reach mutual understanding and to attempt, taking account of all views, to
reach a common position. The largest part of the conclusions of the two
Committees is unanimous. In some cases, however, Committee members have
not been able to reach a unified point of view; their various points of
view are therefore presented in the report in a brief and balanced manner.

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PART I

FAD'S OBJECTIVES, ROLE, PRIORITIES AND STRATEGIES AND

FAO'S FIELD OPERATIONS

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TABLE OF CCImNTTS

Page

Chapter 1: General Introduction 8

Chapter 2: FAO's Objectives, Role, Strategies and Priorities 9

FAO's Purposes 9

A. FAO's Objectives and Roles 9

a) FAO's Objectives 9
b) FAO's Roles or Functions 10

1. Role of FAO as a Global Information Centre on 11
Agriculture and Nutrition

1.1 This report contains the conclusions and recommendations of the
Programme and Finance Committees following the review of FAO's goals and
operations which they carried out jointly in 1988 and 1989, in accordance
with Resolution 6/87 of the Twenty-fourth Session of the FAO Conference.

1.2. The Committees first of all wish to thank the Conference for its
confidence in entrusting them with this exceptional review.

1.3 Throughout the review, the Committees have kept in mind the
Conference's wish to strengthen FAO's capacity so that it may be able to
fulfil its role as lead agency in world agriculture, fisheries and
forestry, and face the challenges of the 1990s and beyond with increased
strength and efficiency, and they have taken due account of the decisions
of the governing and consultative bodies and the views of Member Nations.

1.4 In their debates, conclusions and recommendations, the Committees
have drawn heavily on the experts' reports, the documents provided by the
Secretariat, and the reports and observations of the Director-General. For
reasons of presentation, they do not always quote these or refer to them
explicitly, but they recognize fully how invaluable these have been for
their work. The Committees therefore express their sincere thanks to the
experts, the Secretariat and the Director-General for the considerable
assistance which they provided.

1.5 Resolution 6/87 stipulates that the two Committees "shall study
FAO's role, priorities, objectives and strategies in the field of food and
agriculture, in the light of the evolution and trends in the world food and
agriculture situation". With regard to this question, the Committees took
particular account of Secretariat publications such as "Agriculture:
Towards 2000" and document SJS 1/4, as well as of the experts' contribu-
tion. The Chairman of the Programme Committee had prepared a chapter on
the evolution and trends in the world food and agriculture situation, in
his preliminary draft report. This document was not discussed in detail or
adopted by the Committees; it is attached in Annex I as background.

1.6 The "conclusions and recommendations" of the two Committees deal
specifically with the issues identified in Resolution 6/87, as well as with
other matters which were found to be relevant during the course of the
review:

FAO's objectives, role, strategies and priorities (Chapter 2);

FAO's field operations (Chapter 3);

FAO in the international system (Chapter 4);

- The resource dimension (Chapter 5).

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Chapter 2: FAO's Objectives, Role, Strategies
and Priorities

2.1 In the light of the evolution and trends in the world food and
agricultural situation, the Committees review below:

A. The Organization's objectives and roles, as spelled out in its
mandate, in order to ascertain their relevance and determine to
what extent and how FAO is fulfilling them at present and could
fulfil them in the future.

B. FAO's strategies and priorities, in order to consider measures
to ensure that planning and budget processes clearly show the
connection between these strategies and priorities, planned
activities and resource allocation.

FAO's Purposes

2.2 The Committees cannot fail to note that the concerns of FAO's Member
Nations, as expressed in the Preamble of its Constitution, 45 years ago,
correspond to the needs of the food and agriculture situation and its
future evolution. The Preamble, which also spells out FAO's main purposes
(major goals or objectives), states that Member Nations are concerned
about:

raising levels of nutrition and standards of living of the
peoples under their respective jurisdictions;

securing improvements in the efficiency of the production and
distribution of all food and agricultural products;

bettering the condition of rural populations;

and thus, contributing toward an expanding world economy and
ensuring humanity's freedom from hunger.

2.3 The Committees applaud the vision of FAO's Founding Fathers. They
consider that this concept of FAO is still valid today and that there is no
need for any modification in the major purposes assigned to it in the
Preamble of its Constitution.

A. FAO's Objectives and Roles

a) FAO's Objectives

2.4 The major objectives which FAO must pursue may be identified both in
the Preamble and in Article I of the Constitution. Article I in fact lists
the Organization's functions, but these functions relate implicitly to
certain objectives, and the Committees find it necessary to examine them
first of all from this angle.

2.5 However, the Committees note that in Article I, para. 2(c), "the
conservation of natural resources", formally sets an objective to be
attained. Keeping in view environmental problems, the Committees are
satisfied that the importance of this objective is appropriately reflected
in the Constitution.

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2.6 The Committees considered a detailed analysis of FAO's mandate and
of its medium-term objectives under seven main headings: 1. improvement in
resource utilization, production and productivity; 2. conservation of
natural resources and protection of the environment; 3. development of
human resources; 4. nutritional improvement; 5. improvement in living
standards of the poor and underprivileged; 6. policy adjustment in food
production, distribution and marketing; and 7. better information on
agriculture, nutrition, forestry and fisheries. The Committees agree that
these seven development objectives are consonant with the purposes given in
the Preamble and that their relevance to Article I of the Constitution can
hardly be disputed.

2.7 The multitude of sub-objectives underlying ongoing sub-programmes
and activities reflects the breadth, diversity and variability of the needs
expressed by Member Nations, and the turnover in activities, from one bien-
nium to the next, is considerable. In this connection, the key question is
whether these activities and the sub-objectives they aim at achieving are
indeed in keeping with the Organization's purposes and objectives and
respond to its functions as laid down in its mandate. The Committees are
satisfied that the sub-objectives pursued by these many activities are in
conformity with these objectives and with the mandate.

2.8 The Committees entirely share the view that for efficiency, effec-
tiveness and impact, FAO must carefully choose its programmes and activi-
ties. They recognize that the objective needs and justifiable requests of
Member Nations by far exceed the possibilities of the programme.

b) FAO's Roles or Functions

2.9 Bearing in mind the three major roles which FAO is assigned under
its Constitution, the Committees acknowledge that:

(a) the first, that of assembling information on food and agricul-
ture is exclusive to FAO and they feel that FAO plays a unique
role in this field;

(b) in the second, that of promoting (encouraging and, where appro-
priate, recommending) action in all its spheres of activity in
order to improve agriculture and boost food production in the
Organization's Member Nations, FAO most often has the central or
leadership role. FAO's function as an international forum comes
under this category, its role here being as unique as it is in
the field of information. But there are fields where FAO's
competence is shared with other institutions. (In particular,
this occurs in research, with CGIAR, and in the area of inter-
national policy and commodity agreements, with GATT and UNCTAD);

(c) the third essential role, that of providing the technical assis-
tance requested by Member Nations, is intertwined with the other
two. Through its field operations the Organization translates
into action its own purposes and objectives; manifests its
presence and its support to governments; plays an effective
catalytic role in stimulating governments' development
undertakings and maintains, at the same time, the relevance of
its own programmes. Finally, the Committees agree that because
of the Organization's neutral and non-political character, its
role in this sphere goes well beyond the relatively modest
volume of technical assistance which it brings to governments.

The Committees recognize that these roles are crucial for development where
it is needed most.

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2.10 The Committees have reviewed the activities that the Organization
carries out under each of these headings and their assessment is that,
within the limits of the resources at its disposal, FAO fulfils the func-
tions assigned to it by the Constitution.

2.11 To conclude this review of FAO's objectives and roles, the Commit-
tees support the seven development objectives of the Organization. They
endorse the Organization's three major roles which, it has been stressed,
fully complement each other. There are some differences of opinion, how-
ever, as to the relative proportions to be given to these different roles.
The majority of members are convinced that technical assistance, including
TCP which is crucial to the interests of many member countries, must be
stepped up. Some members feel that special emphasis should be given to the
Organization's other two functions since they are unique to FAO. In
relation to technical assistance, these members feel that this role is
important and should continue, with emphasis on quality and with full
account being taken of FAO's comparative advantage relative to other
agencies.

2.12 However, important new needs have emerged, and the Committees have
considered proposals for strengthening FAO's roles; among these, the
Committees have examined more closely the following requests for streng-
thening FAO's roles: as a global information centre; in policy advice and
formulation; in the promotion of research and extension; in technical
assistance; in the promotion of the new international economic order; and
in a number of other areas.

1. Role of FAO as a Global Information Centre on Agriculture
and Nutrition

2.13 The Committees recognize that FAO has gained wide recognition as the
world centre for agricultural information and analysis; FAO can be rightly
proud of its reputation and can look ahead to continuing to fulfil this
unique role and providing an extremely useful service for Member Nations.
Since the quality of the information collected depends largely on the data
provided by Member Nations, FAO should make every effort to assist some of
these Nations to improve the quality of the data gathered. FAO's analysis,
processing, interpretation and dissemination services, which are appre-
ciated by Member Nations, have not been questioned.

2.14 The Committees welcome the establishment of the World Agricultural
Information Centre (WAICENT), comprising a statistical data base (FAOSTAT)
and a reference data base (FAOREF), whereby users can have direct access to
a larger quantity of more coherent information.

2. FAO's Policy Role

2.15 The Committees recall that FAO has carried out a large number of
agricultural policy studies at global (five large-scale studies), regional,
sub-regional (six studies) and country (several dozen studies) levels. In
so doing it has mobilized multidisciplinary teams and collaborated with
other UN agencies and institutions and Member Nations. The Committees urge
the Organization to continue along these lines.

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2.16 The Committees recognize that FAO should play a more important role
in advising Member Nations on or formulating, at their request, policies
and strategies which strengthen agriculture and rural development, thereby
providing a framework for obtaining sustained production increases, alle-
viating poverty, ensuring food security, and permitting a judicious choice
of corresponding development projects and programmes. The Least Developed
Countries (LDCs) are the countries most in need of this. The Committees
have been informed that, because of the negative impact which structural
adjustment plans can have on poor, under-nourished populations, requests
for this type of assistance from such countries are tending to increase.

2.17 Thus, the Committees recognize that FAO policy advice should play an
active role in structural adjustment and rural development projects and
programmes. FAO should further develop institutional relationships with
the World Bank and UNDP which take into account particular country con-
ditions and individual roles of the UN institutions, so that it is able to
participate in World Bank Consultative Groups and UNDP Round Tables when
the countries concerned so desire (cf. Chapter 3).

2.18 The Committees feel that FAO is well qualified to offer advice on
and formulate sub-sectoral policies (crop cultivation, livestock, fishe-
ries, forestry), as is demonstrated by its role in the design and implemen-
tation of the Tropical Forestry Action Plan. Where sectoral and food
security policies and their relationships with global policy and plans are
concerned, FAO can respond to some requests by making use of all the means
at its disposal; the Committees have been informed that the Organization
is presently participating in half a dozen such studies, and note that the
average cost of a country policy study is US$ 400,000. FAO could also draw
on the macro-economic data and information of the World Bank, the IMF and
other institutions in establishing its own sectoral and sub-sectoral
analyses, as well as studies on agricultural and food products, national
price systems and subsidies.

2.19 In so far as internal organizational arrangements to cope with a
real increase in requests for national policy studies are concerned, the
Committees accept that the decision is within the prerogative of the
Director-General, who will take appropriate action as and when necessary.

2.20 The Committees have reached the conclusion that any structural
adjustment or development programme should take into account the
agriculture sector, its policies, problems and future prospects. They thus
consider it appropriate for FAO to make its views known when it sees scope
for improvements in policies that bear on government objectives to which
they are contributing. With the above points in mind the Committees
consider that FAO's involvement in policy-oriented studies will lead to
more productive results only if: (1) the study is initiated at the request
of the recipient government; (2) coordination is maintained with other
institutions (especially the World Bank and the IMF); (3) the parti-
cipation of FAO is assured in the fora where the findings and recommenda-
tions of the study are discussed; (4) there is monitoring of the follow up
actions taken; and (5) every effort is made to build up the institutional
capacity of member countries in policy analysis, and that FAO's involvement
begins at the earliest possible stage of the process.

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3. Role of FAO in Research and Transfer of Technology

2.21 The Committees wish to stress the importance of research for agri-
cultural development and the need for FAO to continue to support it and
share in its development, in cooperation with the CGIAR system, in order to
derive the greatest possible benefit for developing countries in general,
and the most underprivileged countries and the most deprived producers, in
particular.

2.22 The experts have put forward the idea that part of the surge in
grain production in the 1970s was unsustainable, and that the available
stock of unused new agricultural technology is thinner than it was 15 years
ago. The Committees are of the view that the positive contribution of
research to the future growth of agriculture cannot be overlooked. Quite
apart from possible new developments, there is still considerable scope in
many countries for expanding output by propagating existing technologies in
areas which have not fully benefited in the past, providing the right poli-
cies are in place. The Committees also consider that it would be justified
to search for and place at the service of agricultural development all
possible sources of technology. With the Green Revolution and the progress
in moderately developed Asian and Latin American countries, technologies
and genetic resources from other parts of the world have been improved and
have become a factor of modernization accessible throughout the world. If
this trend continues, agriculture in the twenty-first century could draw
more extensively on technological and genetic reserves from everywhere in
the world, to improve them and then transfer them wherever they could be
beneficial.

2.23 Furthermore, the review of the food and agriculture situation and
its future evolution in the most underprivileged areas and among the most
deprived producers, who constitute one of FAO's most pre-eminent concerns,
has shown that such producers, among their many disadvantages, have little
access to current modern technologies. It was also pointed out that a
number of regions possessed huge stocks of indigenous technology, approp-
riate to very varied milieux and suitable for a wide range of development
levels (production and processing tools and equipment, energy sources,
genetic resources, agricultural and water resource management technology,
erosion control methods accessible to small farmers); all these deserve to
be studied, modernized and transferred to other developing regions, in par-
ticular through TCDC. The same is true of agricultural systems from diffe-
rent parts of the world, which provide solutions that are sustainable and
susceptible of improvement, and which could be transferred. FAO, which
has done much to conserve and assure free availability of genetic resour-
ces, would be in a position to support research on these technologies and
farming systems, in cooperation with CGIAR. In particular, research
efforts on certain subsistence crops (sorghum, millet, roots, tubers and
plantains) should be stepped up.

2.24 Biotechnology has promising applications in a large number of
fields, but results are still uncertain. In this area, FAO could take
account of developments in biotechnology when predicting trends and pro-
viding advice on policy and legislation; encourage the International
Agricultural Research Centres (IARCs) to make greater use of biotechnology
in research on behalf of the developing countries; monitor findings and
identify and publicize promising avenues of research for those countries;
encourage TCDC and the participation of countries in biotechnology net-
works; ensure that biotechnology questions are widely discussed by
specialist groups, including those of Codex Alimentarius and those dealing
with specific commodities; and promote means of discouraging moves to
restrict developing countries' access to biotechnology.

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4. Role of FAO in Technical Assistance

2.25 FAO's field operations will be dealt with in Chapter 3. Without
going into detail on this question, the Committees recall that the experts
of Group II confirm that FAO's field operations have proved to be a vital
instrument for making available to governments the worldwide development
experience accumulated by FAO; that FAO's performance in field operations
compares favourably with that of the other UN agencies; that these opera-
tions assist in the practical application at the field level of the results
of technical and analytical work done by FAO and other agencies; that
field projects serve as the essential vehicle for applying in the field the
policies and recommendations made by FAO's Governing Bodies and, con-
versely, act as channels of information and feedback on ideas emanating
from the field; specifically regarding trust funds, the experts consider
that there is a need for a set of broad priorities. The experts also feel
that FAO's Governing Bodies should play a greater role in providing
guidance for field operations.

2.26 The other group of experts, recognizing the importance of FAO's
technical assistance role, emphasizes the critical importance of the
balance between its Field and Regular Programmes. It cautions that in the
absence of the Regular Programme resources keeping pace with increases in
extra-budgetary resources, the quality of FAO's technical assistance may be
affected. The group concludes that FAO should continue to fulfil this role
but that it must be "done better and in full cognizance of FAO's compara-
tive advantage vis-a-vis other agencies". To that end, the group is of the
view that in the context of current budgetary constraints, the Organization
should draw up guidelines to select projects financed by extra-budgetary
resources and considers that this may lead to fewer but better funded
projects.

2.27 The Committees share the views of the two groups of experts, and on
this basis consider it desirable that the choice of field programmes be
guided by consistency with the Organization's mandate, its objectives and
priorities as established by the membership; it is also important to
retain enough flexibility so as to be able to adapt to the diversity of
situations and needs of Member Nations; in the final analysis, each
request should be examined according to its specific merits, in order to
take advantage of the varied sources of funding.

2.28 The Committees in general also consider that FAO should take fully
into account the relative advantages it has vis-&-vis other institutions.
As regards the specialized agencies and programmes of the UN system, it is
important to avoid, as much as possible, overlapping of activities (cf.
Chapter 4). Moreover, they recognize that other governmental, intergovern-
mental and non-governmental organizations exist, with spheres of competence
which overlap totally or partially with that of FAO. Some of these insti-
tutions do not have the same purpose and objectives as FAO. In this con-
nection, they recall that, because of the persistence of a situation of
inadequate production, of undernutrition and absolute poverty of most of
the population in low- and medium-income countries, the experts of Group II
conclude that development assistance is vital to strengthen the peasant
economy and other rural activities for the benefit of small or marginal
farmers. They agree that FAO must assume its technical assistance role and
place all its experience and advantages at the service of those field
operations falling within its sphere of competence and in line with its
objectives.

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2.29 On the other hand, some members believe that it is in the interest
of the international community that there be as little overlap of activi-
ties among UN specialized agencies as possible. The FAO, in order to serve
its membership best, should focus its resources on those areas of technical
assistance where it has a clear competitive advantage.

5. Role of FAO in the New International Economic
Order (NIEO)

2.30 Resolution 6/87 calls for a review of the question bearing in mind
the need to promote the establishment of a new international economic order
in areas falling within FAO's sphere of competence, in accordance with
Resolution 3/75 of the Eighteenth Conference in 1975.

2.31 The Committees were informed that of the eight broad subjects fal-
ling within the NIEO's framework, FAO plays the leading role within the UN
system, in the fields of food production (including inputs, machinery and
equipment, storage and primary processing) and agricultural research (in
cooperation with CGIAR), including genetic resources, dissemination of
information and technology transfer. In other fields, it shares responsi-
bility with other UN institutions: UNCTAD and GATT in agricultural trade;
UNEP and WHO in the fields of environment and health hazards.

2.32 Well before 1974, FAO had already launched a series of initiatives
which have since been included in the NIEO and since then, FAO has assisted
in the establishment of the NIEO, inter alia through: 1. the programme of
work on International Agricultural -djustment, launched in 1970; 2. the
International Undertaking on World Food Security proposed by the Director-
General in 1974; 3. other initiatives related to basic agricultural pro-
ducts, in cooperation with UNCTAD; 4. the Comprehensive Programme for the
Development and Management of Fisheries in Exclusive Economic Zones; 5.
numerous activities within the framework and in follow-up to WCARRD; 6.
the International Code of Conduct for Distribution and Use of Pesticides;
7. the Tropical Forestry Action Plan; and 8. the International Undertaking
on Plant Genetic Resources, etc..

2.33 The Committees share the view that FAO's support for the NIEO has
been steadfast, pragmatic and practical. By the very nature of things,
many aspects of its mandate are also basic to the establishment of NIEO.
One of its important instrumentalities is the support it provides for TCDC
arrangements in disciplines falling within its sphere of competence and for
the establishment of institutional networks. FAO has made significant
efforts in this regard. The Committees are aware that 50 percent of the
experts employed in the field come from developing countries, which favours
the development of technology transfer in many directions and boosts the
experience of developing countries' experts and the circulation of infor-
mation.

2.34 The Committees agree that FAO should be able to strengthen certain
activities relating to ECDC and to support regional or sub-regional eco-
nomic coordination or integration. Agreements reached on commodities,
trade policies, food and agriculture management training also fall within
the scope of ECDC.

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6. Other Forms of Strengthening

Sustainable Development and Environment

2.35 The Committees agree that FAO should actively promote sustainable
development in all its sectors of competence. They agree that some new
activities in this area should be developed, but underline the need to keep
in view FAO's major objective of increasing food and agricultural produc-
tion in developing countries. They consider that FAO's role is to assist
developing countries to improve their resources and use them in a sustain-
able fashion to meet the needs of their populations and future generations,
and they recommend that a broadened and constructive concept, along these
lines, be followed. The new activities proposed by the experts are exten-
sive: methodology of environmental accounting; impact assessment; incor-
porating environmental criteria in field project design; strategies for
sustainable agriculture in areas with different resource endowments and the
choice of appropriate technologies; study of relationships between agri-
cultural growth and sustainability; cost-effective methods of preserving
genetic stock; environmental protection through afforestation and utili-
zation on a sustained basis of natural woody vegetation. The Committees
stress the importance, in this connection, of efforts to prevent pollution
of water resources and ensure protection of fisheries resources. The
Committees also agree that there should be closer interaction among various
FAO sub-programmes related wholly or partially to sustainability and envi-
ronmental protection.

WCARRD, Women and Youth

2.36 Group II also recommended that FAO accord priority in its field
operations to assisting developing countries to alleviate rural poverty.
Renewed efforts should be made to promote implementation of the WCARRD
Programme of Action. Group II also underlines that additional priority
should be given to assistance for integrated rural development programmes
focusing on women. By the same token, Group I considers that FAO should
extend its attention to rural development more broadly and to a variety of
agriculture and non-agriculture linkages.

2.37 The Committees agree with these recommendations and observe that
while it is, in fact, necessary to make a particular effort to benefit
women, the same is true for youth. In effect, the two problems are linked.
In many countries, the exodus of youth in search of employment increases
even more the work which women have to do in food production, as also in
taking care of the household, children and the aged. It is necessary to
facilitate retention of young farmers in rural areas through creation of
employment in agriculture and in other sectors such as industry, crafts and
services.

International Trade

2.38 The Committees consider that the Organization should play as active
a role as possible in the area of international trade. The Committees
recommend that FAO provide positive assistance to developing countries in
their negotiations in GATT, and speak out against protectionist measures
and other practices which hinder trade of products, especially those
adversely affecting developing countries and discouraging producers in
these countries.

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B. Strategies and Long-term Plans

a) Strategies
2.39 In FAO's planning and budgetary process the establishment of the
biennial Programme of Work and Budget (PWB) is of prime importance, both
constitutionally and in practice, and it is useful to begin by briefly
recalling what it contains.

2.40 The PWB is, first and foremost, a biennial programme of budgeted
activities which, in 1988-89 distributed approximately US$ 500 million from
the Regular Budget among programme elements organized into sub-programmes,
programmes and major programmes. It also contains analyses of situations
and outlook, and outlines of long-term strategies by major programme,
medium-term objectives by programme, as a framework for quantified biennial
action plans broken down to the level of programme elements, the smallest
item of activity and budget which is described, quantified and justified in
the document.

2.41 In the experts' view, FAO needs a long-term strategy to guide its
medium-term activities as well as the elaboration of the biennial PWB.
Such a strategy could be based on the findings and conclusions of
"Agriculture: Towards 2000" and of other FAO global and regional studies,
the quality of which is recognized.

2.42 The Director-General has pointed out to the Committees that FAO
participates in the preparation of the chapter of the UN International
Development Strategy (IDS) relating to food and agriculture, and that he
will submit this strategy to the Council and Conference.

2.43 The experts stress that the Organization's global strategy needs to
be complemented by its regional strategies and they indicate that special
studies prepared by FAO, such as African Agriculture: The Next 25 Years
and the Plans of Action for Africa and Latin America and the Caribbean
contain all the necessary elements. The Committees wish to recall that the
regional studies and programmes provided in Annex I of the PWB also contain
essential elements for the purpose.

2.44 Finally, the Committees point out that FAO relies on its special
action programmes and plans to mobilize extra-budgetary resources for
technical assistance projects and programmes requested by Member Nations.
These are medium- or long-term programmes which focus on and give practical
expression to the Organization's sub-sectoral and technical strategies.
They mobilize, for their own benefit, the administrative and technical
support that the Regular Programme offers. The special action programmes
and plans are consistent with the Organization's main priorities and con-
stitute in fact long-term strategies relating to both the Regular Programme
and the field programmes.

2.45 The Committees agree that the chapter prepared for the IDS covering
the food and agriculture sector should be considered as the Organization's
strategy; they consider, however, that FAO's resources cannot be forecast
in the long term and that the future effects of its activities on the
global agricultural system are difficult to assess in quantitative terms.

- 18 -

b) Review of Strategies

2.46 The Committees note the experts' proposal that studies on regional
strategies and action plans should be updated. They however wish to point
out that this would require the provision of resources proportional to the
degree of strengthening required. They also recognize the usefulness of a
periodic re-assessment of FAO global and regional strategies, but they wish
to stress that the decision to proceed with such re-assessments lies with
the Conference or the Regional Conferences, depending on which body adopted
the strategy.

2.47 The Committees note the experts' view regarding WCARRD. The experts
feel that the WCARRD strategy and programme of action helped to focus
international attention on the problems of agrarian reform and rural deve-
lopment and promote the idea of integrated rural development; however in
trying to cover a wide range of objectives and to encompass the concerns of
diverse shades of opinion through more than 100 proposed actions which were
not always practical, it has failed to achieve all its aims. The Commit-
tees agree that now, ten years later, a balance-sheet of the follow-up
action to WCARRD should be drawn up. This evaluation could be carried out
by consultants under the auspices of the ACC Task Force on Rural Develop-
ment. The Director-General proposes to carry out this review in close
collaboration with the five intergovernmental consultations FAO is organi-
zing to review the progress achieved since 1979, the findings of which are
expected to be presented to the Conference in 1991. The Committees support
this group of recommendations.

c) Medium-term Plan

2.48 The Committees have studied the relative merits of a medium-term
plan comprising proposals for the level and distribution of Regular Budget
resources over a six-year period. Such a plan would have merit if it
enabled the Organization to know, several years in advance, the resources
on which it could count in order to formulate its programme budgets and
plan associated material and human resource investments. Member Nations
would also benefit from knowing, in advance, the budgetary levels involved.

2.49 A large majority of Committee members feel that such medium-term
forecasts would be beneficial only if the Organization's Member Nations
were prepared to give a firm commitment as to the size of the three succes-
sive budgets. Some members feel that even without this the exercise would
be useful, since it would show the direction the Organization intends to
take. Other members would support provisional or indicative budget commit-
ments, given that a separate procedure is followed for approval of the
Regular Budget each biennium. The Committees consider that extra-budgetary
resources could hardly be forecast beyond the first biennium.

2.50 The Committees are convinced that a review of a long-term strategy
and of a medium-term plan would simplify the Governing Bodies' debates on
the Organization's strategies, roles and priorities. Were the Organization
to adopt a long-term strategy and a medium-term plan, the biennial PWBs
would be established and examined in the light of these and could be
streamlined as a result. Thus, the PWB would appear more clearly as a
stage in the implementation of these strategies and of the medium-term plan
of the Organization. Finally, the Committees recommend re-introduction of
a medium-term plan covering three biennia, and if possible including a
provisional indication of resources by programme.

- 19 -

d) Programme of Work and Budget and Priorities

2.51 In any case, the PWB is already a stage in the planning and budge-
ting process, conforming to the broad lines of the medium-term work pro-
gramme, as determined by current strategies. Except in the case of a major
reorientation of strategies or a significant change in the budget level,
the primary purpose of the PWB is to ensure the continuity of the pro-
grammes and the resources allocated to them.

2.52 The PWB must also be able to deal with unexpected difficulties, such
as a sudden worsening of the drought in the Sahel, a locust outbreak, etc..
FAO has been able to take the necessary action on a number of occasions. A
PWB can only accommodate such situations by slowing down or postponing
implementation of approved programmes. The Committees recognize in this
connection the need for a certain measure of flexibility in PWB implementa-
tion. If an emergency situation is not resolved during the biennium in
progress, steps must be taken to strengthen ongoing measures and provide
for new activities in the following budget.

2.53 The Committees recognize that through the establishment of such
priorities, most of which have a medium-term life span, ongoing activities
are expanded and new activities are developed and become part, from one
biennium to the next, of the Organization's programme structure. The
setting of priorities and the role they play are important aspects of the
planning and budgeting process. The Committees hold the view that in a
situation of expanding needs and budgetary constraints, greater attention
must be paid to priorities and their impact on activities.

2.54 The Committees recall that the establishment of a priority is the
result of a long process of discussion in sectoral or technical committees,
in regional committees and conferences, in the Finance and Programme
Committees, in the Council and in the Conference. Furthermore, specialized
consultative bodies also contribute to priority setting, and it is also
influenced by other intergovernmental assemblies, notably those of the
United Nations. Throughout this process, Member Nations may express their
views and verify: 1. the nature of the problems to be resolved and the
objectives to be pursued; 2. the part that FAO will be able to play in
resolving them, bearing in mind its technical capacities, its mandate and
that of its partners; and 3. the nature of activities to be strengthened
or created as a result. Finally, when this process is completed, the
selected priorities will be set out in the PWB together with details of and
justifications for any programme changes which may be necessary as a
result. During this process, FAO Member Nations and Governing Bodies could
usefully bear in mind the guidelines put forward by the experts:

S articulation and justification of the problem to be addressed by
FAO;

S evidence of FAO's comparative advantage in the problem/sector to
which priority is given;

S benefit of the priority activity to a broad segment of FAO's
membership;
S compatibility of the priority activity with the recognized roles
of FAO;

- complementarity with other priorities.

- 20 -

2.55 The Committees note that the experts, who studied the whole process
in detail, feel that the Secretariat takes full account of the results of
this process when establishing the PWB within the limits of the resources
available to it. The Committees generally conclude that FAO's normal
practice of priority-setting is adequate and that it allows for Member
Nations to be consulted as they should be, and in good time, separately in
each region, and collectively in technical committees and in the Governing
Bodies.

2.56 The Committees recognize that priorities may very well concern an
objective, function, means of action or target; they could, for instance,
relate to one of FAO's purposes (the elimination of hunger), major objec-
tives (natural resource preservation and improvement), special objectives
(eradication of rinderpest), major function (technical assistance), par-
ticular function (improving research), geographical targets (Africa and,
within Africa, the Sahel), social targets (women, young people, rural
poor), or means of action (ECDC, TCDC,). For this reason it is difficult
to compare them with each other. Furthermore, their selection may have
been the result of a compromise or a reconciliation of conflicting inte-
rests. The experts are of the opinion that the ranking of priorities would
rest on arbitrary criteria. The Committees feel that a straightforward
ranking of priorities would be very difficult, given their very different
nature and the wide range of issues and interests that are involved. They
conclude that any attempted ranking of such diverse priorities would be
unlikely to gain universal acceptance or contribute significantly to
decision making. Nevertheless, the Committees are conscious that budgetary
pressures and unexpected crises in specific areas can lead to the need for
adjustments.

e) Special Action Programmes

2.57 The Special Action Programmes are a means of coordinating the con-
tent and orientations of Regular Programme and field activities. At
present, FAO is implementing 14 Special Action Programmes; ten fall within
the major programme for Agriculture and two each in Fisheries and Forestry.
Some have emerged from World Conferences (such as WCARRD), others from
recommendations and decisions emanating from FAO's Governing Bodies in
response to new priorities, while still others are connected with the
global strategies adopted by the Conference (e.g. FSAS and World Food
Security). Finally, some are related to a particular technical field (e.g.
PFL, SIDP and the Fertilizer Programme). The Special Action Programmes are
key components of the mechanism of technical assistance provided by FAO and
of the donors channelling their aid through the Organization. Each Special
Action Programme acts as a focus for mobilization of extra-budgetary funds
for field projects. Regular Budget resources are used to promote and
coordinate these programmes and provide the necessary means of action for
planning, formulation, monitoring and evaluation. Over the years, special
action programmes have attracted large quantities of extra-budgetary
resources, especially within the framework of the FAO/Government Coopera-
tive Programme.

2.58 Generally speaking, the validity of FAO's strategies, action plans
and Special Action Programmes approved by the Governing Bodies is recog-
nized. The latter are often at the centre of international debates and
play an essential role in drawing attention to the interdependence of the
different parts of the world's agricultural system and the need for con-
certed action. To be useful, FAO's strategies must lead to action plans
and activities which have an important catalytic effect.

- 21 -

2.59 The Committees feel that among the reasons for the success of the
Tropical forestry Action Plan (TFAP) are that preliminary studies were well
carried out and Member Nations and public opinion were kept informed; the
objectives of the plan are well-defined and accepted by all parties con-
cerned; it has been designed so as to, on the one hand, mobilize the
necessary resources, and on the other hand to enable the countries con-
cerned to participate; it focuses on practical achievements; it provides
a useful and effective mechanism to coordinate and mobilize the parties
concerned. The Committees concluded that the TFAP is a good action plan
model giving practical effect to a well-prepared strategy which deserves
large-scale support.

2.60 The Group II experts recommend that steps should be taken to examine
the possibility of setting up new Special Action Programmes. The Director-
General has suggested that the Governing Bodies may be able, in the medium
term, to envisage the launching of a small number of new Special Action
Programmes in areas to which the international community assigns top
priority and which Trust Fund donors and potential recipients consider
particularly important. The Committees support all these proposals.

f) The Format of the PWB

2.61 The Committees support the experts' view that the present format of
the PWB is detailed and well-conceived and permits a fruitful dialogue
between the Governing Bodies and the Secretariat. The Committees agree
that every effort should continue to be made to keep the format responsive
to the needs of the member countries, keeping in view the requirements of
cost-effectiveness and manageability.

2.62 The Committees also support the view that the PWB should indicate as
well as possible the linkages between sub-programmes, on the one hand, and
priorities and objectives on the other, as well as the contributions of
various programmes and sub-programmes to the different themes approved by
the Governing Bodies. The Committees however, like the experts, wish to
warn against providing a surfeit of information, which would make the
content of the document more difficult to assimilate without clarifying or
facilitating the debate among Member Nations on essential questions.

2.63 The Committees considered the question of the reform of the
programme budget process at their First Special Joint Session, in May 1988.
After an in-depth review of the steps already undertaken in this regard in
the United Nations and other UN agencies, as well as the debate on the
matter at the Twenty-fourth Session of the FAD Conference, the Committees
decided:

a) To request the Director-General to prepare a brief document of
about five pages indicating the budget level he intended to use
in the preparation of the Programme of Work and Budget 1990-91,
together with the main activities to be undertaken;

b) This Outline of the Programme of Work and Budget 1990-91 would
be made available to the members of the Committees two weeks
prior to the joint session which would be convened in January
1989 to give early consideration to the document prepared by the
Director-General;

c) The joint session would make recommendations for the Director-
General's consideration on the level of the budget and the main
activities of the Programme for 1990-91.

- 22 -

The Director-General indicated his readiness to comply with the above
request. At its Ninety-fourth Session in November 1988, the Council
approved, on an experimental basis, the proposal put forth by the two
Committees for preparation of the Programme of Work and Budget 1990-91. It
has accordingly been implemented in 1989. The Committees are of the view
that this process was useful in preparing the 1990-91 Programme of Work and
Budget and should be continued, at least for another biennium, so that its
value can be judged over a longer time period. In addition, the Committees
express the hope that measures such as this will have a positive influence
on normalization of the Organization's financial situation.

2.64 Recommendations

The Committees convey to the Council and the Conference the following
recommendations, taking into account the reservations expressed in the
pertinent paragraphs.

Objectives and Roles

Experience has demonstrated the relevance and validity of the
Preamble and Article I of FAO's Constitution, which define its roles
and objectives, with respect to the situation and trends in food and
agriculture. The Committees recognize that the activities of the
Organization and the objectives it pursues are in conformity with
its mandate and that it amply fulfils, within the limits of its
means, the three major roles of information, promotion and technical
assistance which are assigned to it, and they confirm the validity
of these (cf. 2.2-2.11).

Finally, the Committees underline the importance of the requests for
strengthening of FAO's role which have been expressed during the
Review, and in general they consider them justified considering the
situation and foreseeable trends: as a world information centre, in
the area of policy, in research and technology, in technical assis-
tance, in the new international economic order, in the field of
environment, in the implementation of WCARRD, in particular for
women and youth, and in the area of international trade;

(i) The Committees recommend that means be sought to ensure the
necessary strengthening in order to face future challenges
(cf. 2.12-2.38).

(ii) The Committees recommend that FAO actively promote sustain-
able development aimed not only at conserving natural re-
sources, but at improving them with a view to their rational
exploitation for the benefit of agricultural and rural
development, particularly in developing countries. To this
end, the Committees also recommend a series of new activi-
ties designed to take greater account of the concept of sus-
tainable development (cf. 2.35).

(iii) The Committees recommend that all the necessary attention be
given to technologies, genetic resources and appropriate
farming systems from all over the world, with a view to
improving, transferring and promoting them, in particular
through TCDC, in order to maximize their impact on agricul-
tural development (cf. 2.23).

- 23 -

(iv) The Committees recommend that FAO provide positive assis-
tance to developing countries in their negotiations in GATT,
and speak out against protectionist measures and other
practices which hinder trade of products, especially those
adversely affecting developing countries and discouraging
producers in these countries (cf. 2.38).

Strategies

(v) The Committees recommend that the chapter on food and agri-
culture prepared for the IDS, and subsequently reviewed and
approved by FAO's Governing Bodies, be adopted as the
Organization's long-term strategy. The chapter in question
would reflect the main findings and conclusions of
"Agriculture: Toward 2000" and would synthesize FAO's
regional and sub-sectoral strategies (cf. 2.41 and 2.45).

(vi) The Committees recommend that an evaluation be carried out
of the results of WCARRD, to determine what FAO and other
institutions in the UN system can each do to reinvigorate
those parts of the programme of action which merit this.
The study should be decided upon in agreement with the other
UN agencies and Member Nations concerned. Use could be made
of consultants under the auspices of the ACC Task Force and
in liaison with the five intergovernmental consultations
organized by FAO to review progress since 1979 (cf. 2.47).
They also recommend pursuit of efforts on behalf of women in
rural development, and increased efforts to assist young
farmers and to create non-farm employment (cf. 2.37).

- Medium-term Plan

(vii) The Committees recommend re-introduction of a medium-term
plan covering three biennia, and if possible including
provisional indication of resources by programme. This plan
should be based on FAO's long-term strategy as defined above
and on the medium-term objectives and broad lines of work
involved in each programme in the PWB (cf. 2.48-2.50).

- Priorities and the PWB

(viii) The Committees recommend that all necessary attention be
paid to the process of and criteria for priority setting,
and in particular they recommend that the following
guidelines be borne in mind:

articulation and justification of the problem to be
addressed by FAO;

evidence of FAO's comparative advantage in the problem/
sector to which priority is given;

benefit of the priority activity to a broad segment of
FAO's membership;

compatibility of the priority activity with the recog-
nized roles of FAO;

- complementarity with other priorities (cf. 2.54).

- 24 -

They also recommend that the PWB highlight as well as
possible the links between sub-programmes, priorities and
objectives, as well as the contribution of each of the
programmes and sub-programmes to the different themes
approved by the Governing Bodies (cf. 2.62).

(ix) The Committees recommend that the programme budget process
implemented on an experimental basis for the preparation of
the 1990-91 Programme of Work and Budget be continued for at
least another biennium, so that its value can be judged over
a longer time period (cf. 2.63).

- Special Action Programmes

(x) The Committees recommend that a small number of new Special
Action Programmes be established covering areas considered
to be of high priority, so as to focus and mobilize Trust
Funds for projects and programmes of particular interest to
Member Nations (cf. 2.60).

- 25 -

Chapter 3: FAO Field Operations

A. Significance of FAO's Field Operations
3.1 FAO provides administrative and technical support for a large number
of projects, the financing of which, from UNDP (about half), from other UN
and multilateral funds and from governments, will represent some US$ 650
million of extra-budgetary expenditure in 1988-89, or more than the Regular
Budget. The Regular Budget provides full financing for the TCP, amounting
in 1988-89 to 12.8 percent of the total budget or just over US$ 63 million.
It was clear to the experts, however, that for the governments, the impor-
tance of FAO's field operations extends well beyond their value in terms of
the relatively small share of the total flow of aid which they represent.
They consider FAO to be an essential, non-political and neutral partner in
their development undertakings. It is through its field operations that
FAO gives concrete expression to its aims and objectives and makes its
presence and impact felt in the countries. Indeed its usefulness is
measured in terms of field operation results in developing countries.

a) Linkages between Field Operations and the Regular Programme

3.2 Project support activities comprise both administrative and tech-
nical tasks. Generally speaking, administrative support tasks (recruitment
of experts and consultants, contracts, purchases, travel, etc.) are carried
out by the operations divisions and the administrative services. Technical
support includes project preparation (identification, formulation), by the
Development Department, project and programme implementation (establishing
profiles and choosing experts, consultants, sub-contractors and providing
technical materials and advice) by the technical services and, finally,
monitoring and evaluation by the Evaluation Service.

3.3 Support for field operations is therefore a complex task, closely
linked with the Regular Programme. The relationship between the two pro-
grammes, however, is not merely structural and functional. As the experts
indicate, technical support to field operations involves the practical
application of the results of the technical and analytical work done by FAO
and provides, in return, data and feedback on experience and ideas emana-
ting from the field, enabling the Regular Programme to keep up to date.
The Committees wish to stress, therefore, that field operations provide the
means whereby FAO can acquire unique development experience worldwide and
serve as the essential tool through which this experience is made available
to Member Nations. By making its technical and conceptual capacities
available to the field in this way, the Regular Programme maintains its
capacity to respond to countries' real needs and can adapt to changing
priorities and development methods.

3.4 For constitutional reasons and to enable FAO to make the fullest use
of and maintain its capacities at their highest level, the Organization's
field operations are fully justified and both groups of experts draw atten-
tion to the important role FAO must play in technical assistance. But,
looking beyond these considerations, there is a more fundamental justifica-
tion for fully utilizing the Organization's capacity to provide assistance.
It is, as the Group II experts clearly show, because of the enduring state
of absolute poverty and undernutrition in which more than 1,000 million
persons, mainly in the rural areas of the developing countries live that a
whole series of measures must be drawn up and development programmes and
field operations undertaken to help the developing countries alleviate

- 26 -

rural poverty, increase food production and provide greater access to food.
The Group I experts recall that the spheres of competence of many other
government and intergovernmental institutions and other bodies overlap
those of FAO either wholly or partly. Bearing all these points in mind,
the Committees feel that if FAO is to fulfil its mandate it must assume its
technical assistance role fully and, insofar as its resources allow and in
keeping with its purposes and objectives, make its experience available to
field operations.

b) Fuller Utilization of FAO's Capacities

3.5 It is the Group II experts' view that the specialized agencies of
the UN system are finding it increasingly difficult to play their role as
lead agency and coordinator in their sphere of competence. It is increa-
singly frequent to find UNDP, the World Bank and other financing institu-
tions leaving them out of meetings with governments (even the technical
preparation stage of such meetings); indeed, according to the experts,
they are merely considered as executing agencies. Despite having defended
its prerogatives well, FAO has been no exception to this rule. Group I
experts lay particular stress on the fact that the support cost reimburse-
ment FAO receives from UNDP is inadequate (13 percent against a real cost
of some 20 percent), and this has a negative effect on the quality of the
service rendered and, in the longer term, on the Organization's capacities.
Furthermore, UNDP assigns a growing share of its projects to other
institutions and implements some of them itself, with the result that apart
from a slight recovery in 1988 FAO's share in UNDP-financed projects has
continued to decline.

3.6 The Committees are convinced that all these factors are already
inhibiting the Organization from playing its appropriate role and will
prevent it from facing new requirements in the future. It may be asked -
to say with concern is putting it mildly what will be the realism and
effectiveness of agricultural and rural development projects and pro-
grammes, identified and formulated on a strictly economic and financial
basis, without taking account of the advice of FAO, the leading agency, on
the technical, agro-ecological and social conditions particular to the
agricultural sector in so many countries.

3.7 To conclude, the Committees welcome the experts' recommendations,
which echo the many similar calls by the Committees themselves and the
Director-General, that FAO be fully recognized as the lead agency for
sectoral and sub-sectoral studies in its field of competence and be closely
associated, when the countries concerned so desire, with the process of
preparation and holding of multilateral coordination meetings such as UNDP
Round Tables and World Bank Consultative Groups, as well as with UNDP-
sponsored National Technical Cooperation Assessment Programmes. The
Committees also feel that mutual understanding and rapport between the UN
agencies should be strengthened.

c) Role of the Investment Centre

3.8 The purpose of the Investment Centre is to help developing countries
to formulate investment projects intended to attract capital resources from
the multilateral financing institutions. The Committees are pleased that
the experts recognize the excellence of the Centre's working methods and
performance. The role of the Investment Centre is very important: to
date, about 745 Investment Centre-assisted projects have been financed,
involving total investments of some US$ 34,000 million. The Investment

- 27 -

Centre is financed through two funding arrangements: the FAO/WB
Cooperative Programme and the Investment Support Programme, which works
with a variety of multilateral institutions, such as IFAD, the regional
banks and UNCDF. The work accomplished through these two arrangements
deserves the strongest support of Member Nations.

3.9 The Committees however note that the future of the FAO/WB
Cooperative Programme has been studied and that World Bank funding has
again been extended by two years. The Committees recommend that this
programme be continued and strengthened, drawing on the Centre's experience
and on the quality of its services, in order to increase investment flows
to the agricultural sector.

B. Growing Complexity of Field Operations

3.10 Shortly after its founding and in accordance with paragraph 3 of
Article 1 of its Constitution, FAO began, as early as 1946, to respond to
requests for technical assistance by providing consultant missions and
experts' services. Over the years, this form of cooperation has become
broader, more structured and more complex due to the multidisciplinary
nature of the Organization's operations, their large size and geographical
spread and the variety of funding sources. Integrated development projects
and global programmes requiring wide international cooperation, the promo-
tion of ECDC/TCDC and international networking of "centres of excellence"
are good examples of this. The experts have moreover recommended that
efforts already under way to combine technical, financial and food aid be
stepped up. Furthermore, new administrative modalities have emerged as
other forms of assistance comprising highly specialized short-term missions
developed and project execution began to involve more local experts and
even the governments themselves.

3.11 The higher costs and increased workload resulting from this growing
complexity and these new modalities for project implementation have
recently come up against limitations on financial and human resources which
are affecting the extent and quality of the administrative and technical
support provided by the Organization.

a) Quality of Field Operations Support

3.12 Whilst acknowledging the quality of FAO's field activities, the
Committees draw attention to a number of weaknesses which could affect
them: the uneven quality of project identification and formulation;
delayed project implementation due to slow recruitment, equipment procure-
ment and delivery procedures; and insufficient technical support. FAO is
aware of these problems and is trying to overcome them within the limits of
its means. A number of factors are, however, beyond the Organization's
control. Project implementation depends to some extent on governments'
ability to meet their obligations (counterpart staff, recurrent costs) and
can be seriously hampered by the slow administrative procedures in coun-
tries.

3.13 Furthermore, the gradual worsening of conditions of employment
within the UN system, to which the Director-General has referred on
numerous occasions, means that FAO is finding it increasingly difficult to
recruit the high-level experts it needs. These are problems which Member
Nations will have to address on a system-wide basis.

- 28 -

b) Computerization

3.14 The Committees have been informed of the recent measures taken by
FAO to improve its services, involving closer monitoring of field opera-
tions at every stage of the project cycle. The introduction of PERSYS and
FINSYS should improve project administrative and financial management; the
Committees have also been informed by the Director-General that a compre-
hensive computerized project information and monitoring system (PROSYS),
which would permit increased efficiency in technical support, accelerated
supply of inputs, and monitoring, is under review. The Committees agree
with the experts' view that a relatively modest investment in computeriza-
tion is fully justified and should be given the highest priority, including
through mobilization of extra-budgetary resources if necessary. The
Committees are nevertheless aware that until a satisfactory solution is
found to the problem of inadequate resources and staff, these necessary
measures will not suffice to improve project formulation and technical sup-
port to any significant degree.

c) The Problem of Staff and Financial Resources

3.15 At present, FAO is not usually reimbursed the costs incurred in
project formulation. Furthermore, support cost reimbursements by UNDP and
trust fund donors fail, by a wide margin, to cover the actual costs
incurred in execution. The difference is covered by a de facto subsidy
from the Regular Budget for extra-budgetary activities, the cost of which
was estimated at over US$ 20 million in 1987. The Committees trust that
the ongoing discussions within the UN system on new support cost sharing
arrangements with UNDP will lead to equitable solutions.

3.16 Furthermore, with its present technical staff FAO cannot provide
adequate technical support for projects. The Committees note that profes-
sional staffing levels for the Regular Programme are lower than those
approved by the 1975 Conference. The number of posts in Headquarters
divisions has remained practically unchanged for about ten years. The
situation has, of course, been aggravated by the financial difficulties
experienced in recent years which has resulted in a freeze on the filling
of vacancies whilst, as has been seen, the Organization's task has grown in
magnitude and complexity.

3.17 The result is that the workload of FAO's staff is too often exces-
sive: each country project officer in the Agricultural Operations Division
must handle some 40 projects on average; officers working in the technical
divisions must provide support for some 20 projects in addition to carrying
out their normal duties and contributing to the preparation of new
projects. Thus, the quality of the technical support given to projects is
sometimes not up to the mark; officers often only have time to offer
routine comments lacking in technical substance. Their field missions are
infrequent and sometimes non-existent.

3.18 The Committees feel that FAO's capacity to provide adequate tech-
nical and administrative support should be fully restored. In the short
term, the Committees consider that additional CPOs and extra technical
backstopping staff should be assigned as an immediate ameliorative measure.
Some members underlined, however, that this would have to be done in the
context of available resources and other priorities. Most members however
did not deem it appropriate to make such a pre-judgement at this stage on
the need for extra-budgetary resources. In the longer term, the Committees

- 29 -

agree that arrangements will have to be set up keeping in view the outcome
of the management review, the effects of further introduction of management
methods, such as computerization, increased delegation/devolution of powers
and functions to project staff/FAORs/Regional Offices and the final shape
of "successor arrangements" for UNDP support costs.

3.19 The Committees agree that government execution of projects should be
increased, but they are mindful of the financial cost that may result from
this. The Committees are also of the view that FAO should step up its
efforts to provide training for national personnel in project formulation,
management and evaluation with a view to strengthening countries' capaci-
ties in project implementation. The same is true of the suggestion that
FAO staff be given the opportunity to update their knowledge and skills
periodically.

C. Trust Funds

3.20 The following are the three basic types of trust funds, which have
become increasingly important in recent years: 1) the FAO/Government
Cooperative Programme, through which a donor entrusts FAO with the execu-
tion of development projects in recipient countries; 2) Unilateral Trust
Funds, through which a Member Nation entrusts FAO with funds for the
execution of projects on its territory; and 3) the Associate Professional
Officers programme, which enables FAO to employ young people from developed
countries in its field projects.

3.21 The Committees recognize that Trust Funds play a major role as a
source of financing for field activities, supplementing UNDP and TCP and,
whilst they would like to see these resources increased, they share the
experts' wish that a certain balance between the various modes of financing
be maintained. They nevertheless look forward to maximum financing from
multilateral sources such as UNDP, the World Bank and regional banks, as
well as from the different development funds. The Committees also stress
the need to ensure that trust funds retain their multilateral character so
that FAO may preserve its independence.

a) Trust Funds, Priorities and Choice of Projects
(cf. Chapter 2)

3.22 The Committees note that more than two thirds of all trust funds are
currently channelled to sectors to which FAO's Governing Bodies assign
priority, especially through Special Action Programmes. This concordance
is particularly close with programmes such as the Tropical Forestry Action
Plan, Food Security Assistance and Seed Improvement and Development. Such
links make it possible to focus field operations in a coherent manner,
towards the Organization's medium-term objectives.

3.23 FAO receives many more requests for projects than its budget and
extra-budgetary resources allow it to implement. Some members of the
Committees have therefore suggested that FAO become more selective and
encourage governments and bilateral programmes to give preference to the
implementation of field activities which meet the priorities set by FAO's
Governing Bodies (e.g. Special Action Programmes) or comply with the
general policy orientations established by the United Nations system for
matters such as environmental protection and the integration of women in
development. These members are concerned that FAO's available technical
support capabilities should not be stretched beyond the level at which they
can cope effectively. Most members do not share this concern, and while

- 30 -

stressing the need for FAO to take suitable measures to expand its techni-
cal support capabilities, have pointed out that these general orientations
and Special Action Programmes cannot meet all the Member Nations' require-
ments and it is therefore also essential to be able to respond effectively
to specific requests of governments and to take advantage of all financing
opportunities. The Committees in general consider that in the final
analysis each request for or offer of assistance should be considered on
its own merits and that field activities must continue to be flexible
enough to take account of the diversity of situations prevailing in Member
Nations, their stage of development and the type of assistance they request
and require, as already mentioned in para. 2.27.

3.24 The experts have recommended indicative planning in order to estab-
lish priorities for programmes financed through trust funds, in keeping
with the Organization's medium-term objectives. The Committees are aware
of the usefulness of channelling a large proportion of trust funds to meet
these objectives and feel that this recommendation may best be fulfilled
through Special Action Programmes and plans of action such as TFAP. Estab-
lishing a small number of Special Action Programmes in fields to which the
International Community assigns top priority, as suggested by the Director-
General, would be the best way of focusing the attention of donors and
recipients on the Organization's objectives.

3.25 The Committees examined the proposal to establish a new project and
programme identification and formulation facility for investment and tech-
nical cooperation. Such a service would initially draw on the experience
gained by the Investment Centre and would provide donors with projects
designed on the basis of the objectives and priorities referred to above.
This facility would be financed through a mechanism whereby the sums needed
to cover the cost incurred in preliminary studies would be drawn "automati-
cally" from the budgets of approved projects and programmes. For this, a
fund would have to be set up to finance costs incurred in project prepara-
tion, which would be reimbursed by donor-approved projects. This fund
would be replenished from extra-budgetary resources, when necessary, to
cover costs incurred for projects which have not found financing. The
Committees share the view of both the Director-General and the experts that
this is an excellent recommendation. The establishment of this facility and
the financing mechanism involved would help improve the quality of field
programmes, strengthen the Organization's technical assistance capacity and
channel financing towards its objectives and plans of action. Similar
working procedures which have already been put in place for certain trust
funds and for the TFAP are clear examples of this.

3.26 The Committees therefore recommend that the Secretariat contact the
donors who finance FAO's extra-budgetary activities in order to work out a
suitable general framework. One member reserved his position on this
recommendation.

c) Standardizing Procedures

3.27 The Committees recommend that steps be taken to obtain donor agree-
ment on standardizing project formats, reporting, evaluating and auditing
procedures. They have been informed that the Secretariat has already begun
to take the necessary steps, with a view to harmonizing project document
formats and procedures with those used by UNDP.

- 31 -

D. Technical Cooperation Programme

3.28 The Technical Cooperation Programme was set up in 1976 under the
Regular Programme and provides a rapid and flexible response to unforeseen
requests for short-term, small-scale assistance, i.e., to cope with emer-
gencies, promote technical cooperation among developing countries, provide
technical training or formulate policy advice. It may also provide brid-
ging assistance between projects as well as between different sources of
financing and act as a catalyst for large technical assistance and invest-
ment programmes and projects. It is governed by strict criteria laid down
by FAO's Governing Bodies and its interventions cannot, by their very
nature, be programmed in advance.

3.29 The Committees have taken note that governments much appreciate the
flexible and quick manner in which TCP funds are made available to them.
Programme criteria and modes of intervention have been shown to be
adequate. The Committees recommend that TCP be maintained in its present
form as a vital element in FAO's field operations.

3.30 Most members have stressed that funds allocated to TCP are inade-
quate to meet requests and that the Programme's share of the Organization's
budget should, in the future, gradually be increased. Some members, how-
ever, have doubts that such an increase is justified, given the likely
continuing limits to FAO's overall resources.

3.31 The Committees note the experts' view that resources allocated to
the TCP are clearly inadequate to meet the requests of governments, and
that it would be desirable for FAD to have a greater availability of funds,
through trust funds or otherwise, possibly administered through TCP, for
being spent flexibly. They also note the opinion of the experts that some
of the activities taken up under the TCP, with better planning by govern-
ments, could possibly be included in the programmes funded by UNDP or other
donors.

3.32 Finally, the Committees agree that, bearing in mind the Director-
General's comments on the subject, the Secretariat should contact donors to
determine whether they would be prepared to provide additional
contributions on a voluntary basis, either to TCP or through trust funds.

E. Role of Country Offices

3.33 The experts have recommended strengthening the Country Offices
rather than the Regional Offices, while recognizing that the latter are a
necessary part of FAO's structure. The Committees in general support this
view although the majority of members stress the importance of the Regional
Offices for their regions. Seventy-four FAO Country Representatives,
covering over one hundred countries, exercise a wide range of functions
which come within the province of both the Regular Programme and field
activities; in brief, they are responsible for: 1). ensuring liaison
between Headquarters and the countries, providing and collecting informa-
tion and making the Organization's services available to the national
authorities; 2) maintaining an ongoing dialogue with government authori-
ties and local representatives of multilateral and bilateral aid organiza-
tions in matters relating to agricultural policy, strategies and priori-
ties, and acting as advisors in this area; and 3) providing assistance for
the identification, evaluation, development, implementation and monitoring
of programmes and projects, including emergency projects.

- 32 -

3.34 The Committees have been informed that the Country Offices do not
generally have the resources to fulfil their functions effectively.
Staffing levels and equipment have been kept to a minimum while the
complexity and volume of administrative work have continued to increase;
the growing trend toward project implementation by national coordinators
without assistance from international administrative personnel and direct
project execution by governments have considerably increased the workload
of these offices whilst, as mentioned above, Headquarters' support has
become increasingly insufficient. The Representations have therefore
tended to concentrate on field projects rather than on policy development
with governments. Under the circumstances, the Committees feel that
priority should be given to strengthening these Offices so that they may be
better prepared to: 1) formulate policy advice both for governments and
aid organizations; and 2) provide support for field activities.

3.35 The Committees are of the view that the trend toward decentraliza-
tion to country level of the functions and responsibilities involved in
administrative support for field projects should continue and that steps
should be taken to compensate for lack of resources: by using telecommuni-
cations equipment, jointly with UNDP and other UN institutions; by equip-
ping the Offices and by appointing new programme officers to the large
countries.

3.36 The Committees suggest that decentralization of technical support in
fields of particular concern to one region or sub-region be undertaken on
an experimental basis; competent technical staff would then be assigned to
a better equipped Office and would provide technical assistance to projects
in surrounding countries.

3.37 The Committees support these suggestions to decentralize technical
and administrative support, provided that such steps are taken within the
limits imposed by the Organization's rules and by the need for administra-
tive and financial control; they nevertheless feel that such measures
could never be fully effective unless a solution to the overall problem of
inadequate administrative and technical resources is found. The Committees
consider that for the time being, it would be wise to proceed only where it
is feasible and efficient to do so. In the final analysis, the decision on
the matter is within the prerogatives of the Director-General.

F. Review of Field Operations by the Governing Bodies

3.38 During the Twenty-fourth Session of the Conference, the wish was
expressed in several quarters that FAO's Governing Bodies should take
greater interest in field operations so as to give them the desired impetus
and orientation. The experts studied the question in detail and the Com-
mittees have examined the different possible solutions.

3.39 According to present arrangements, every odd numbered year the
Governing Bodies review the Reviews of the Regular Programme, which deals
with the implementation of the PWB, and of the Field Programmes. At the
same time, the examination of the PWB provides them with details concerning
the resources allocated to field programme support and related extra-
budgetary resources. The general Conference gives Member Nations the
opportunity to discuss the Organization's general development assistance
policy and the regional conferences give the countries of the region the
opportunity to make their priorities and requirements known.

- 33 -

3.40 These arrangements are substantial; the Committees nevertheless
feel that they do not give Member Nations the opportunity to hold suffi-
ciently in-depth and systematic discussions on the major aspects of and
policies relating to field operations; their view is that the time has
come to take steps to facilitate more frequent dialogue between Member
Nations so that, in line with the experts' recommendation, they may "regu-
larly monitor FAO's field operations, discuss general policy orientations
and review FAO's relations with other UN and funding agencies to promote
mutual understanding and to strengthen the relationship between the Regular
Programme and field operations".

3.41 With this in mind, the Committees have envisaged several options;
inter alia they considered the possibility of entrusting the review of
field programme orientation and content to a committee especially estab-
lished for the purpose, but the majority recognizes that this would lead to
a duplication of procedures and of the work of the Governing Bodies without
either establishing clearly the link between the Regular Programme and the
field programmes, or strengthening it.

3.42 The Committees tend to support the experts' proposal which, insofar
as questions regarding Field Programme content and links between this and
the Regular Programme are concerned, could lead to the following arrange-
ments:

(a) the Committees on Agriculture, Forestry, Fisheries and Food
Security would include in their agendas items concerning the
field operations falling within their spheres of competence;

(b) the Secretariat would synthesize their conclusions and recommen-
dations which would be examined in joint sessions of the Finance
and Programme Committees, whose reports would then be submitted
to the Council;

(c) in sessions following the joint meetings, the Council would
include in its agenda questions relating to field programme
policies and orientations, including relations with financing
sources and other sources of external aid;

(d) the current practice whereby the Conference reviews field opera-
tions would be maintained.

3.43 This arrangement would require no amendment to the Basic Texts and
would not add significantly to costs; it would, however, provide the means
whereby an in-depth review of field operations could be carried out by the
bodies already competent to review the Regular Programme, which would be
able to recognize and strengthen the links between the two programmes.

G. Inspection of Field Operations

3.44 The Committees have considered the experts' recommendation to estab-
lish two or three posts of inspector in the Office of the Director-General,
to strengthen monitoring and inspection of field operations with stress to
be laid on project management and organizational matters.

3.45 The Committees have been informed that mechanisms already exist to
examine field project management and organization. These include annual
tripartite reviews, evaluations during the course of implementation or
final evaluations and auditing missions; the Director-General considers
that it would be preferable to strengthen the Evaluation Service rather
than establish a separate unit to deal with field inspection.

- 34 -

3.46 The Committees recommend that the task of strengthening field
inspection should be added to those of the Evaluation Service, which is
itself in the Office of the Director-General. Some members would have
favoured an inspection unit independent of the Organization, with the
reports being made available to donors and recipient governments on
request. The inspection unit's responsibilities could include carrying out
reviews of management and organizational aspects of FAO projects. It could
assist the operational and technical units concerned to improve their own
field project monitoring. It could also carry out ad hoc missions and
identify measures for project improvement. Finally, it-could prepare
inspection reports for submission to the Director-General, and through him
to the Governing Bodies.

H. Non-Governmental Organizations

3.47 The Committees stress the active and growing role played by NGOs,
whose resources, according to the experts, exceed those of the whole of the
United Nations system, particularly when it comes to the fight against
poverty among the most deprived rural populations. The Committees welcome
the cooperation which has developed over the years between FAO and the
NGOs, both national and international, notably through the Freedom from
Hunger Campaign/Action for Development. They feel that this cooperation
should be strengthened and, in this perspective, recommend that the
Secretariat review the administrative and financial procedures governing
relations between FAO and the NGOs, and welcome the Director-General's
proposal that such a review be carried out in 1990 and the report submitted
to the Programme and Finance Committees and the Council.

I. Recommendations

3.48 The review of field operations has permitted identification of a
certain number of measures designed to strengthen their effectiveness for
the benefit of the Member Nations, as well as their coherence and confor-
mity with the general orientations set by the Governing Bodies and their
function as a catalyst for and purveyor of assistance, as prescribed in
paragraph 2(b) of Resolution 6/87 adopted by Twenty-fourth Conference.
These measures are the subject of the recommendations below.

3.49 This review has shown that at the request of Member Nations, the
Organization fulfils the technical assistance functions assigned to it
under Article 1, para. 3 of its Constitution by making full use of its
administrative and technical capacities (presently diminished by budget
restrictions and inadequate extra-budgetary financing for support
activities), even though the costs incurred and the number and complexity
of the tasks involved have continued to* rise. Thus, even though the
quality of project support is as good as that provided by other United
Nations institutions, it has nevertheless been affected by the budgetary
constraints and the situation is all the more serious since requirements
and requests for assistance are growing. Furthermore, it is through
technical assistance that FAO contributes most directly "to the efforts of
member countries and people to eliminate hunger, malnutrition and poverty"
(R. 6/87, para. 2.a).

3.50 Given such difficult circumstances, it is essential to: 1. make it
possible for the Governing Bodies to monitor the orientations and opera-
tions of the Field Programme regularly and also strengthen the links be-
tween Field Programmes and the Regular Programme; 2. protect and streng-

- 35 -

then the Organization's administrative and technical capacities, where pos-
sible, to enable it to cope effectively with increased requirements in the
coming years; and 3. find ways and means to streamline project support
tasks and make them more effective.

3.51 Concerning measures to enable the Governing Bodies to review field
operations more closely and to strengthen the links between these and the
Regular Programme, the Committees recommend that:

(i) The content and the orientation of field programmes be
reviewed regularly in the technical committees, in joint
sessions of the Programme and Finance Committees and in the
Council (cf. 3.42);
(ii) administrative questions and questions concerning relations
with financing agencies and other sources of external assis-
tance be reviewed regularly by the Council;

(iii) the Conference continue to review field operations;

(iv) a field inspection unit be established reinforcing the
Evaluation Service and focusing mainly on project management
and organization (cf. 3.44 to 3.45).
3.52 In an attempt to protect and strengthen the Organization's support
capacities, the Committees recommend that:

(v) additional project officers be appointed as an immediate
ameliorative measure and that technical backstopping staff
be increased (cf. 3.18);

(vi) donors be contacted with a view to establishing an approp-
riate general framework for a special extra-budgetary
financing mechanism serving a strengthened project
identification/formulation facility drawing initially on the
experience of the Investment Centre. One member reserved
his position on this recommendation (cf. 3.26);

(vii) TCP continue in its present form as a vital element in FAD's
field operations and donors also be contacted with a view to
obtaining additional voluntary contributions, either for TCP
itself or to be. administered along the same lines
(cf. 3.29 and 3.32);

(viii) steps be taken to strengthen the FAO/World Bank Cooperative
Programme, drawing fully on the recognized competence of the
Investment Centre, in order to increase investment flows to
the agricultural sector (cf. 3.9);

(ix) present administrative and financial procedures guiding
FAO's cooperation with NGOs be reviewed with a view to
strengthening that cooperation (cf. 3.47);
3.53 Insofar as ways and means of strengthening and improving the effec-
tiveness of the administrative and technical support services are con-
cerned, some of these do not depend solely on FAO, and the mode of applica-
tion of others falls within the prerogatives of the Director-General. The
review nevertheless has shown the desirability of certain improvements. The
Committees therefore recommend that ways be found to:

- 36 -

(x) decentralize administrative support tasks to the FAORs,
provided that the Representations have the means to carry
them out and where such a step can improve the services ren-
dered, but bearing in mind the need to abide by the Organi-
zation's rules governing administrative and financial con-
trol (cf. 3.35);

(xi) enlarge and equip the Representations in order to strengthen
their administrative support functions and their role as
interlocutors with governments and other institutions on
matters relating to agricultural policy and agricultural and
rural development programmes (cf. 3.34 and 3.35);

(xiii) develop computerized management systems for use in adminis-
tration as well as in field programme monitoring (cf. 3.14);

(xiv) encourage increased government participation in project
execution, and provide more training for national personnel
in project identification, formulation, management and
monitoring and evaluation (cf. 3.19);

3.54 Finally, the Committees wish to put forward a general recommenda-
tion:

(xv) that, on the basis of its comparative advantage and its
experience, FAO be recognized as the lead agency and
coordinator for sectoral and sub-sectoral reviews in its
field of competence and that it be fully associated in the
process of preparation and holding of multilateral
coordination meetings such as UNDP Round Tables and World
Bank Consultative Groups as well as with UNDP-sponsored
national technical cooperation assessment programmes so that
it can provide its essential technical contribution; and
that mutual understanding and rapport among the UN agencies
be strengthened (cf. 3.7).

- 37 -

Chapter 4: FAO in the International System

4.1 Para. 2(d) of Resolution 6/87 enjoins the Committees to "... examine
the working relationship between the Organization and other organs, organi-
zations and bodies of the UN system and international financing institu-
tions, including the activities of the Field Programme, so as to avoid dup-
lication of work, ensure complementarity and promote the most effective
support possible by FAO for country priorities".

4.2 The Committees believe that in addition to its near-universality of
membership, FAD maintains in its sphere a certain number of unique advan-
tages: the widest and most solid information bases in the field of food
and agriculture; the close involvement of the Regular Programme in the
field programmes, and the resulting effect of mutual reinforcement; the
breadth of its mandate, the multinational and multidisciplinary character
of the Secretariat, as well as its access to specialized commissions and
technical working groups.

4.3 FAO interacts with 25 agencies of the UN system, with which it has
more than 200 formal and informal cooperative agreements. The Organization
has created joint divisions with IAEA and the World Bank, as well as with
four of the five UN regional economic and social commissions. It works in
close collaboration and has joint programmes with several UN Agencies on
certain major topics of common interest such as nutrition, environment,
rural development, agricultural education and agricultural industries.
Cooperation between FAO and the rest of the UN system is thus extensive
and, in some areas, intensive. The experts have found that in general this
cooperation was rather good, but that in some cases there is room for
improvement.

4.4 Based on this assessment, the Committees have come to the conclusion
that FAO's relationship can be judged as satisfactory with the United
Nations itself, ILO, WHO, IFAD, IAEA, GATT, UNCTAD and UNFPA. While
relationships with the World Bank are already considerable, there seems to
be scope for strengthening them and expanding the areas of cooperation.
Having identified questions which have arisen with six organizations of the
UN system (UNEP, UNICEF, WFC, UNDP, UNIDO and WFP), the Committees make
some proposals below aimed at improving relations between FAO and these
organizations.

4.5 The FAO/World Bank Cooperative Programme (CP) is the principal area
of collaboration between the two organizations. Established in 1964, the
CP is funded 75 percent by the Bank and 25 percent by FAO, and has func-
tioned to the satisfaction of both parties. Any doubts about the immediate
future of the CP have been laid to rest by a recent assurance received from
the World Bank.

4.6 Outside the framework of the CP, FAO cooperation with the World Bank
has been intermittent. The experts have proposed that it be strengthened.
They have highlighted, in particular, the usefulness of increased inter-
action between FAO and the World Bank in sector and sub-sector studies,
policy advice at the national level, the execution of World Bank-funded
technical assistance projects, and participation by FAO in the World Bank
Consultative Groups, especially in the preparatory and follow-up stages.
To this effect, the experts have suggested periodic consultations between
FAO and the World Bank at senior management level. The Director-General
has advised the Committees that preliminary steps were already taken in

- 38 -

1986. In the light of the proposal of the experts, and the two Committees'
discussion, he has approached the World Bank with a view to moving ahead
with an arrangement of this type. The Bank has answered positively. The
Committees fully support this initiative.

4.7 UNEP: While FAO and UNEP have cooperated closely for a long time in
certain areas, the experts found examples of avoidable overlap and duplica-
tion of activities. These may be attributed to UNEP's lack of familiarity
with FAO's programmes, and its tendency to move away from joint programming
as practised in the past. The Committees endorse the experts' recommenda-
tion that consultations be held between FAO and UNEP with a view to harmo-
nizing work programmes, and to reviving the practice of joint programming.

4.8 UNICEF: Here again, the experts found some overlapping of activi-
ties, notably at the field level, although cooperation is satisfactory in
other areas. The Committees recommend that necessary steps be taken to
strengthen collaboration at the country level between FAORs and UNICEF
representatives.

4.9 WFC: The experts identify only one problem of overlap. It concerns
food security policy work at the national level. The Committees recommend
that the senior staff of each organization make an effort to work out a
solution to this issue.

4.10 UNDP

(a) The experts have raised several problems concerning the rela-
tionship between UNDP and FAO. Other specialized agencies
experience analogous problems, which include primarily direct
project execution by UNDP, the use of non-UN agencies for pro-
ject implementation, reimbursement of support costs at a level
below actual expenditure, and the exclusion of FAO from the
Round Tables organized by UNDP.

(b) Moreover, the Committees were informed of some new developments
since the completion of the experts' work. In a recent report
to the Governing Council UNDP and World Development by the Year
2000, it has been proposed that UNDP become a "full-service
development institution", retaining and consulting the specia-
lized agencies as and when thought necessary, but essentially
managing operational activities itself with recipient govern-
ments. After the discussions at the Governing Council, no final
decision has yet been taken.

(c) In agreement with the experts, and without being able to enter
into the technical details, the Committees recommend that the
senior staff of the two organizations meet at least once a year
to resolve outstanding problems. The Director-General has
accepted this recommendation, and in fact UNDP has already taken
an initiative in this direction. The Committees underline that
it would be advisable to reinforce contacts between the UNDP
Resident Representatives and the FAORs in countries, in order to
resolve any problems which arise on the spot.

(d) The issue of the level of reimbursement of support costs, which
affects all executing agencies, is at present under study by an
expert group appointed by the UNDP Governing Council. It is
hoped that the problem will be resolved.

- 39 -

4.11 UNIDO

(a) The experts have identified several difficulties in the applica-
tion of the 1969 agreement between FAO and UNIDO. Indeed UNIDO
has committed itself to a range of activities which are within
the mandate of FAO under the 1969 agreement (including rural
small-scale agro- and fish processing plants, farm hand tools
manufacturing, fishing boat design and construction, production
of animal vaccine, work on biotechnology related to food and
agriculture, and pesticides). The experts have recommended that
FAO pursue with UNIDO at the highest level the possible creation
of a Joint FAO/UNIDO Division for Agro-Industrial Development.

(b) The Committees are not opposed to the creation of a Joint
FAO/UNIDO Division. However, they feel that first priority
should be given to an effort to bring about the effective func-
tioning of the 1969 agreement.

4.12 WFP: The World Food Programme, a joint programme of FAO and the
United Nations, is charged with providing food aid. This aid falls within
the wider framework of food policy and food security, with which FAO is
charged under the direction of the Committee on Food Security, a subsidiary
organ of the Council. Recently, WFP has undertaken independent studies on
food policies. The experts have recommended that WFP rely more on the
services of FAO, which has proved its competence in the area of policy
analysis, and that it have greater recourse to FAO's technical cooperation
projects to place food aid at the service of development. The experts also
suggest that WFP make greater use of FAO's Global Information and Early
Warning System. In the light of overlapping in the area of food aid
policies, the Committees urge WFP and FAO to strengthen their cooperation
for timely and effective provision of food aid, and that overlapping be
avoided.

4.13 In conclusion of their discussion on inter-agency relations, the
Committees:

(i) recall that cooperation is a two-way street. To improve
relations between two institutions, it is advisable that
each of the two parties come part of the way. As far as FAO
is concerned, the Committees welcome the assurances given,
in this connection by the Director-General on behalf of
himself and his colleagues. The Committees are confident
that equal goodwill will be found among all institutions,
and that closer working relationships can be established;

(ii) must point out that cooperation among UN Agencies generally
reflects the attitudes which Member Nations adopt in the
Governing Bodies of the organizations concerned. Frequent-
ly, Member Nations support contradictory views on the same
subject in different fora. By harmonizing their own posi-
tions, Member Nations would contribute to harmonizing and
coordinating work in the system as a whole.
4.14 Recommendations

(i) World Bank.- The Committees support the experts' proposal
and the Director-General's initiative to establish periodic
consultations between FAO and the World Bank, in order to
reinforce cooperation between the two institutions in the
area of sectoral and sub-sectoral studies, advice and
formulation of policies (cf. 4.6).

- 40 -

(ii) UNEP The Committees recommend that consultations between
FAO and UNEP be started again as soon as possible in order
to harmonize work programmes and reinstitute the system of
joint programming (cf. 4.7).

(iii) UNICEF The Committees recommend that
taken to strengthen collaboration at
between FAORs and UNICEF representatives

(iv) WFC The Committees recommend that senic
and WFC try to resolve the problem of oi
vities in the area of national food
(cf. 4.9).

necessary steps be
the country level
(cf. 4.8).

r officials of FAO
overlapping of acti-
security policies

(v) UNDP The Committees recommend that senior officials of FAO
and-UNDP meet at least once a year to resolve outstanding
problems and that consultations between UNDP Resident
Representatives and FAO Representatives in the developing
countries be reinforced in order to resolve issues on the
spot (cf. 4.10).

(vi) UNIDO The Committees recommend that high-level consulta-
tions be undertaken between FAO and UNIDO in order to ensure
first of all the effective functioning of the 1969
agreement, and in order to study the possibility of creating
an FAO/UNIDO Division of Agro-Industrial Development
(cf. 4.11).

(vii) WFP The Committees recommend that cooperation between FAO
and WFP be reinforced, and that overlapping be avoided (cf.
4.12).

- 41 -

Chapter 5: The Resource Dimension

5.1 The Committees accept and support the view of the experts that FAO
"has demonstrated innovations in its work and has been responsive to
changing world events and emerging needs at global and regional levels",
and that it "remains a solid and dynamic institution". The Committees
conclude that there is scope for strengthening some areas of the
Organization's work. The Committees' proposals in this regard are set
forth in the recommendation sections of Chapters 2 and 3.

5.2 The Committees also point out that lately the Organization has faced
severe cash flow problems with debilitating effects on the size and quality
of its programmes. They recommend that all Member Nations resolve this
financial stringency by honouring their financial obligations on time and
by finding a solution for the payment of arrears.

5.3 The Committees agree that the review has shown that the streng-
thening of the Organization's activities is desirable in several areas and
that there will be more and more requests for FAO's assistance in the
future. The cost of implementing the Committees' recommendations has been
assessed preliminarily by the Secretariat, at US$ 20 million for the first
biennium (cf. Annex II). Several solutions may be envisaged, alone or in
combination, to finance this strengthening:

(i) finance the recommendations, or at least those considered
most urgent, through a special supplementary appropriation
for the 1990-91 biennium;

(ii) if needed, request the Director-General to make programme
adjustments to the extent possible;

(iii) seek extra-budgetary resources for those activities which do
not form part of the Regular Programme, but which are likely
to interest potential donors;

(iv) for future biennia, envisage augmenting Regular Budget
resources to permit implementation of the recommendations,
possibly in a phased manner.
5.4 A few members are of the opinion that the availability of additional
resources would very likely continue to be limited, and even under the very
best of circumstances, uncertain. They thus feel that the main focus, when
considering the resources needed for taking up any of the activities aimed
at strengthening the Organization, would have to be on reallocation of
priorities.

5.5 These members are of the view that it is vital for FAO to establish
guidelines for the selection of Regular Programme priorities and to ensure
that field operations are carried out with more emphasis on quality and
with full cognizance of FAO's comparative advantage vis-4-vis other
agencies and institutions. Ultimately, the ability of the Organization to
fulfil its mandate will depend, in the view of these members, on extending
available resources to meet its most pressing demands as cost effectively
as possible.

42 -

5.6 Most members are of the view that though the liquidity situation
continues to be difficult, it is not possible to accept a pre-judgement on
the resource scenario of the future. They feel that all alternatives in
para. 5.3 would need to be fully explored in mobilizing FAO's requirements
for further funds but that in the final analysis, the desirability of
additional resources can hardly be contested if the Organization is to
retain its vitality and continue to fulfil its mandate as a technical-cum-
development agency of excellence. The majority of the Committees fully
endorse the conclusions of the experts regarding the need for additional
resources, particularly in the context of the anticipated increase in
demands for FAO's services.

5.7 The Committees wish to stress, in conclusion, that FAO continues to
be a solid and dynamic institution which merits the confidence of its
Member Nations.

- 43 -

Annex I: Situation and Trends
in World Food and Agriculture

1. This document was prepared by the Chairman of the Programme
Committee and is annexed as a background reference document. It was not
discussed in detail, or adopted, by the Committees. It is based on
Secretariat publications such as "Agriculture: Toward 2000" and on
document SJS 1/4, specially prepared for the review, as well as on the
experts' contributions, and views expressed in the Committees.

A. The Situation

2. The experts first stress the importance of the agricultural sector.
Crop and livestock farming, fisheries and forestry and, to a certain
extent, processing and distribution of their products as well as food, all
fall within FAO's sphere of competence. While taking into account the
overall increase in population, it must be stressed that since indus-
trialized society began, the agricultural sector has been an endless source
of labour for industry, trade and services and of population for the towns.
Now, at the end of the 20th Century, agriculture still directly provides a
livelihood for more than 50 percent of the world population and 60 percent
of the population in the developing countries. Because of agriculture's
extensive territorial coverage and its importance both economically and
demographically, the significance of the role it can play in keeping
overall economic balance or in causing serious imbalances, including in the
areas of employment and the environment, cannot be underestimated. The
fortunes of the agricultural sector can underpin or undermine global pros-
perity.

3. Disparities between rich and poor continue to widen: at one
extreme, modern commercial production is passing through a critical period
because surpluses remain unsold or do not find adequate commercial outlets;
at the other extreme, half the world's population is short of food and
lacks purchasing power because its technology, production levels and income
are insufficient. This has resulted in a significant decline in effective
demand, limiting opportunities for profitable investment and restraining
growth in all sectors of the world economy. It must be stressed that, in
most countries, the proportion of national income the agricultural popula-
tion receives for its services is well below what it should be, given that
population's size in relation to total population. There is no doubt that
the resulting lack of purchasing power, from which about half the world's
population suffers, is a major factor in overall economic instability.

4. It must furthermore be stressed that the requirements which the food
and agricultural sector is called upon to fulfil are rather unique, in that
they are, for the most part, essential requirements, and have to be satis-
fied at least to a minimal degree. Consequently, responding to these food
requirements and ensuring self-sufficiency and basic food supplies is a
major moral, social and political obligation, which, if neglected for any
length of time, necessarily becomes a source of political instability and
unrest.

5. It may be noted, as the experts point out, that there are consi-
derable difficulties to be overcome in the three fields falling wholly or
partly within FAD's ambit, agricultural and agro-industrial economy and
employment, food, and the environment, and the situation may even be
described as critical. It is however, a rather contradictory situation.

- 44 -

On the one hand, the agricultural production capacity of the developed
countries and the production capacity of certain segments of the developing
countries' agriculture are expanding to the point where more is being
produced than effective world demand can absorb and, on the other, the
greater part of the agricultural sector in most developing countries is
having increasing difficulty meeting the food and monetary income require-
ments of rapidly expanding populations.

B. Trends

6. The Group II experts note that according to FAO's projections, food
supplies in 94 low-income countries will continue to provide little more
than 2,000 calories per person per day and, by the end of the century, some
530 million people will consume fewer than 1,520 calories per day and
these are average figures: food consumption in the rural areas, where most
of the poor live, is therefore likely to be even lower. Group I notes that
according to "Agriculture: Toward 2000", between now and the end of the
century, at the global level, agricultural output will be able to meet a
foreseeable increase in effective demand of the order of 2 percent
annually: around 1 percent in the developed countries where population and
per caput consumption seems to be reaching a ceiling and 3 percent in
developing countries where, despite some slowing down, population growth
rates will continue to be high, as will per caput food consumption among
the sectors of the population whose incomes are rising. Even though
production may continue to meet effective demand, the problem of inadequate
food production and undernutrition in the poorest countries and among the
poorest populations remains. Developing countries' needs will continue to
widely exceed their effective demand, which could therefore increase con-
siderably if the problem of poverty were to be even partially solved.

7. The Group I experts feel that the Secretariat's forecasts are rather
too optimistic; they are of the view that the stock of technology avail-
able for the years to come has virtually been exhausted; that it will take
a further 15 years to develop and implement new technology; that arable
land reserves are becoming scarce; that some cultivated land is deterio-
rating and water tables are being drawn down. All these are factors which
restrict production growth, even though there may be unexpected sharp rises
in demand in China, the USSR and Eastern-bloc countries. According to
this line of thinking, highly productive modern agriculture could hardly
continue to progress at the same speed in the developed countries where it
is already widely spread; in the future it would be necessary therefore to
count on production increases in the developing countries, where there is
still room for technical progress. It may be thought, however, that modern
technology might progress very little in underprivileged areas and among
deprived farming populations in developing countries, especially in the
least developed countries, where it is virtually unknown. Progress would
be made primarily in certain less disadvantaged sectors of the moderately
developed countries.

8. The experts' work on the subject may therefore be judged positively,
and the following four conclusions may be drawn: 1. steps must be taken to
cope with a market that is likely to be tighter than expected; 2. the
impoverished and under-nourished section of the world's rural and agricul-
tural populations, lacking purchasing power, are in danger of continuing to
be deprived of modern technology and agricultural development, their
effective demand will remain low and the risk is that the situation could
worsen and spread; 3. it will be as necessary as ever to provide develop-
ment assistance to alleviate rural poverty, increase food production and

- 45 -

allow greater access to food; and 4. the reserves of conventional tech-
nology, which are becoming thinner, could be inadequate to permit rapid
expansion of production, and that it would be necessary to undertake
research in other directions. In attempting to determine "how FAO could
make the most effective contribution to the efforts of member countries and
people to eliminate hunger, malnutrition and poverty" (6/87, 2.a), during
the debate several factors likely to lead to worsening agricultural and
rural poverty were cited, and some of these certainly deserve to be
stressed.

9. The first is worsening terms of trade. Rapid modernization of com-
mercial agriculture in recent decades has led to a sudden rise in produc-
tivity, while prices of agricultural goods have fallen sharply in real
terms and terms of trade have deteriorated (cereal prices declined in real
terms by more than 40 percent in 30 years). The same declining trend may
exist for highly mechanized crops such as wheat, maize, rice, protein- and
oil-rich grains and cotton and for most animal products (meat, milk, eggs
and wool); it exists, but to a lesser degree in the long term for the
slightly mechanized sectors (coffee and cocoa) and for those sectors where
the free market accounts for only a small share of total trade (sugar).

10. As a result, a large part of the agricultural population of
developing countries, lacking technology, competitivity and income and
being unable to invest, cannot keep pace with the modernization process.
The most impoverished cannot cope with declining farm prices and worsening
terms of trade. In an attempt to escape undernutrition, the poorest
farmers are forced to draw on the last-remaining agro-biological reserves,
thereby degrading the land they cultivate; but in the end their efforts
are destined to fail and they are condemned to hunger if they remain on the
land and unemployment and poverty if they move to the under-equipped and
under-industrialized outskirts of the urban centres. Furthermore, for
these people faced with such a critical situation, the smallest climatic or
biological accident assumes the dimensions of a natural catastrophe.

11. Furthermore, it should be recalled that the process of adjusting
supply to effective demand is neither perfect nor rapid; it involves a
series of wide fluctuations. Phases of surplus production alternate with
phases of relative scarcity. When there are surpluses, prices fall, subsi-
dized exports at unbeatable prices flood the market, farmers reduce land
areas given over to crop cultivation, non-competitive producers are edged
out and the weakest are ruined. The result of all this is that production
declines and a few years later the situation is reversed: demand exceeds
supply; stocks dwindle and relative shortages set in. At times like these
prices rise, poor countries and poor people lacking foreign currency and
purchasing power are forced to cut back on food purchases, food aid is
reduced and undernutrition spreads once more; the most competitive farmers
in developed countries, who are often subsidized, take advantage of the
situation to invest and step up their production and market share and, a
few years later, there are surpluses once again.

12. Attention should therefore be drawn to the fact that low prices and
"dumping" act as a brake on production, help to push out poor farmers,
above all in the developing countries, and ruin the weakest among them,
while high prices make it difficult for poor, already-indebted countries
and impoverished people, lacking foreign currency and purchasing power, to
obtain food supplies. Under these circumstances, it may be considered
that: 1. trading practices such as dumping should be discontinued; 2.
efforts to obtain agreements to control price fluctuations should be

- 46 -

stepped up; and 3. poor countries have the legitimate right to protect
themselves from the harmful effects of price fluctuations and of harmful
trading practices by taking whatever steps they consider necessary to
defend their food security, i.e. by protecting their subsistence food
production sector and by providing support for their farmers and rural
poor, within the limits of the means at their disposal and the assistance
they may receive for the purpose.

13. The question of food security cannot be approached without taking
account of the state of food dependence and heavy indebtedness of most
developing countries; it must be stressed that food commodities (cereals,
roots, bulbs, tubers, plantains, soybean, peas, beans, groundnuts and other
pulses and oilseeds) cannot be dealt with in the same way as non-essentials
and that as long as poor countries and underprivileged populations continue
to lack the purchasing power and foreign currency necessary to enable them
to obtain food supplies in all circumstances (even when prices are high),
achieving food security will necessarily mean attaining the highest
possible degree of food self-sufficiency.

14. However, protection and assistance for the development of the sub-
sistence food production sectors of the poorest countries must not result
in underprivileged countries and poor farmers being prevented from partici-
pating in the international division of labour. It is only when and to the
extent that they ,have been able to restore and develop satisfactory
production conditions that they will be able both to improve their own
diets and to obtain a marketable surplus large enough to allow them to draw
on the slim comparative advantages of their land. And it is then they will
need a favourable environment (supplies, transport and marketing facili-
ties, technical support, credit, etc.) and the most remunerative prices
possible. This will often have to mean the lifting of taxes on agricul-
tural exports, which hold down producer prices, and the adjusting of export
prices, in order to ensure the regular and adequate incomes they need for
investment and development purposes.

15. Poor countries and producers could participate more in the inter-
national division of labour if the international environment were more
favourable and if the market presented fewer risks. To this end, one may
consider, as do the experts, that the reduction of protectionist measures,
taken by countries with considerable purchasing power to the detriment of
agricultural products from developing countries is essential. Such
measures limit the markets available to developing country producers,
depress prices and incomes, reduce or wipe out investment margins and slow
down development. Finally, on the subject of rural depopulation, it must
be stressed that this is aggravated by agricultural and rural poverty. In
many developing countries, strong, healthy men (young men in particular)
leave their villages in search of jobs and income, leaving their wives and
children and the elderly behind them. The result of this is a further
weakening of crop production capacity, an increase in the women's workload
and in malnutrition and failure to maintain agricultural infrastructures
and soil fertility. This is just one reason why rural development activi-
ties must especially focus on women and on young farmers, who must be given
assistance to establish themselves. The experts likewise stress the need
to create jobs in all sectors of activity in the rural areas, especially in
agriculture-related industries, cottage industries and services.

- 47 -

16. As the experts note, direct development assistance interventions for
agriculture and rural development will be even more necessary in coming
years than in the past. Such interventions will have to focus on raising
agricultural and food production and the incomes and consumption levels of
the most deprived rural people, usually located in the most underprivileged
areas of the least developed countries, as well as on landless peasants in
over-populated areas and in areas where cultivable land is inequitably
distributed. They must, above all, make it possible for the people to
purchase tools and appropriate inputs, and include the real improvement of
production conditions and infrastructures, so that they can increase
production and overcome the drawbacks of their environment. The marginal
status and weakness of these farmers are not only due to lack of tools and
technology but often to a deteriorating environment resulting from natural
causes or from the farmers' inability to respect good husbandry practices
and maintain irrigation facilities. Development assistance interventions
should therefore often include activities designed to improve physical
production conditions and infrastructure in which as many better nourished
and more suitably equipped people as possible can participate. The experts
of Group II recommend that, as a general rule, technology requiring a large
labour force and a small volume of capital be used in an attempt to stabi-
lize output and increase productivity.

17. If these interventions were to take account of food requirements and
ways of achieving a better nutritional balance, they could, at least at
first, be made more useful for the poorest and most undernourished groups.

18. It is the experts' view that food aid which, when misused, discou-
rages developing country producers, can play a useful role in development
interventions and policies. In order to avoid food distribution having a
negative effect on local production, and except in emergencies or other
exceptional cases, food aid programmes should draw when possible on local
and regional resources. They should also create additional domestic food
demand at least proportional to the volume of food distributed. They
should therefore focus on under-nourished groups and be linked to supple-
mentary employment programmes (food for work) and programmes designed to
restore and improve local production capacities.

19. Whilst top priority should be given to agricultural development,
development assistance interventions should also include non-agricultural
activities within a broader rural development concept aimed at giving the
most deprived groups greater access to land, markets, credit, training,
information and jobs, including non-farm jobs and, finally, to an adequate
well-balanced diet all these being things they totally or partly lack.
The 1979 World Conference on Agrarian Reform and Rural Development (WCARRD)
strengthened FAO's mandate in this field. Now, ten years later, it is time
to carry out a critical assessment of WCARRD's action and see how FAO and
other UN agencies can, each in its respective field, give new impetus to
the parts of the action programme which deserve to be revived. (cf. Chapter
2).

20. To conclude this initial analysis, one may consider that emergency
food aid and additional development assistance will continue to be
necessary for a long time to come, but that the way to find a suitable and
lasting solution to the problem of poverty, undernutrition and inadequate
consumption of all other goods and services lies in agricultural and rural
development for the benefit of the most deprived populations of the most
underprivileged areas of the least developed countries. It goes without
saying that not only is it in the interest of poor countries and poor

- 48 -

populations to restore food and agricultural production and effective
demand among all population groups but, considering the multiplier effects
of improved production, together with resulting increased demand, it is
also in the interest of all sectors of the world economy and all sectors of
the world population, even the most well-to-do, and would be a good way of
boosting world economic expansion. The developed countries therefore stand
to gain by using all the means at their disposal to help the developing
countries achieve these objectives. These are the still valid reasons for
renewing and strengthening the consensus which prevailed when FAO was
founded and its major objectives set.

C. An Open Debate: Division of Labour in Global Agriculture, Trade
Policies and Food Security

21. After the debates, there was an exchange of views with the
rapporteurs of the two groups of experts regarding agricultural trade
policies currently under negotiation in other UN bodies (GATT, UNCTAD,
etc.), the terms of which are as follows:

(a) in order to permit a more fairly-balanced distribution of
agricultural production and income and more equitable food
consumption, two types of policies were proposed;

(b) the first, a free trade policy, would involve abolishing all
taxes and subsidies on imports and exports and all types of
direct or indirect assistance and subsidies for investment
and agricultural production, including public-funded
research and extension. This would result in agriculture in
each area developing according to its natural tendencies
and, finally, to a division of labour involving an ideal
distribution of production based on the "comparative advan-
tages" of the producer areas participating in the market.
It must be noted that the improvement of transport and
trading facilities and the end of the colonial system have
already contributed to a development of this kind, but it
has come up against protectionist and price support policies
of one type or another and, at times of production sur-
pluses, export subsidies, particularly by the developed
countries which can afford them. Several questions were
posed regarding this policy: would the sharp fluctuations,
through which the balance between market supply and effec-
tive demand is achieved and which is deadly for marginal
farmers, not worsen? Do not many poorer areas have, in
fact, more comparative disadvantages than true advantages?
Can we seriously consider depriving the developing coun-
tries' food production and subsistence agriculture of all
means of protection and public funding for research, trai-
ning, extension, investment and development?

(c) the second option, "market sharing", would involve nego-
tiating and fixing quotas and fair delivery prices for each
producer country (or group of countries) based on local
production conditions and costs, and sufficient to give
farmers reasonable remuneration and keep them on the land.
It is the experts' view that such a policy, very favourable
to the least developed countries, could readily be envisaged
as long as present imbalances persist (and this could be for
several decades), but that it would be difficult to nego-
tiate and implement.

- 49 -

22. In the end, the debate on this subject was not settled. The
following conclusions could be retained: try, through negotiation, to
scale down protectionist and support measures as well as some of the unfair
trading practices used by developed countries, if such measures and
practices hinder agricultural development in the developing countries and
increase rural poverty; try to put an end to price fluctuations which are
harmful to marginal producers, to indebted countries lacking foreign
exchange, and to poor consumers; protect and support basic food production
and impoverished farmers by providing as much development assistance as
possible in order to offset the natural, material and technical hardships
from which they so greatly suffer; grant sufficient priority to basic food
production so that poor countries and poor consumers may reach a degree of
food self-sufficiency sufficient to protect them from price rises and food
shortages and thus achieve the minimum level of food security to which each
individual is entitled; take steps, as soon as improved environmental
conditions and the use of tools and new farming techniques allow, to obtain
a marketable surplus and to use this surplus to participate as advanta-
geously as possible, in the international division of labour; consider
agricultural development part and parcel of integrated rural development
and focus adequate attention on women, youth and job-creating non-farm
activities. It is therefore greatly to be hoped that FAO will continue, in
keeping with its objectives, to act and speak out in favour of all these
measures, using all the means and fora at its disposal.

D. Livestock

23. It was considered surprising that so little attention is paid to
livestock in the reports, since it is a very important sub-sector, not only
for what it contributes quantitatively and qualitatively to food and nutri-
tional balance, but also as an important means of agricultural development.

24. In most countries, when incomes rise, consumption of animal products
increases more quickly than that of basic plant products. In high income
countries, rise in demand for animal products is small; it is sharper in
middle-income countries and the trend could become more marked in coming
years. But, since increases in demand for animal products is most often
met through the development of modern livestock farms, which require large
quantities of primary plant products (grain, cassava, soybean cake), the
conversion coefficient of which is high, replacing plant products by animal
products does not reduce demand for basic plant products. On the con-
trary, demand for plant products increases and this, too, can help tighten
the cereal and protein-rich grain market.

25. In the developing countries, livestock raising is the only means of
subsistence of the pastoral people of the steppes, prairies and savannas;
when combined with crop farming, livestock raising provides draught animal
power, transport and inexpensive fertilizer for tens of millions of farmers
who will not, for a long time to come, have access to farm machinery. Sus-
tainable production systems combining crop and livestock farming could con-
stitute a satisfactory alternative to shifting, manual cultivation in
savannas and degraded tropical forests, as well as in some pastoral systems
that are losing momentum.

26. Developing countries need considerable assistance to be able to
acquire the skills and appropriate material and technical resources they
need in order to improve animal nutrition, health and genetic resources,
make rational use of their pastoral resources and develop sustainable crop
and livestock farming systems. The broad lines of FAO's livestock pro-
gramme point the way.

- 50 -

E. Fisheries

27. The experts show that as a result of full exploitation, or even
overfishing, food fish catches are reaching their maximum level, while
increase in demand, due to income and population growth, could be of the
order of 20 percent by the end of the century, which would lead to a con-
tinued rise in the prices of preferred species. The policy response must
therefore be in the direction of much more effective management and more
rational exploitation of marine and inland water fishery resources, better
use of the resources after capture and, finally, increased emphasis on
aquaculture development.

28. The orientations of the World Conference on Fisheries Management and
Development of June-July 1984, which were reaffirmed in 1987, may therefore
be supported. The developing countries need assistance to acquire the
skills and material and technical means they need to exploit rationally a
larger share of world resources, and special attention should be focused on
small-scale coastal and inland water fishermen and on aquaculture.

F. Forestry

29. Without any doubt, the most serious problem facing this sub-sector
is the deforestation of tropical forests, where over 11.5 million hectares
are destroyed every year and less than 2 million hectares are planted, and
where there is a need for quadrupling present investments. The causes of
this deforestation are: overexploitation of firewood, uncontrolled
exploitation of high quality tropical timber reserves, land clearance for
large-scale agricultural development, cash crop plantations and cattle
ranches.

30. Finally, more particularly for the slash and burn (shifting)
cultivators especially in Africa and Latin America, but sometimes in South
East Asia and the Pacific Islands, the tropical forests represent the land
they cultivate and a reserve of arable land. As a general rule, after two
or three years of crop cultivation, the forest farmers suspend cultivation
for 15 to 30 years to allow the land to regain its fertility. However, as
the population expands, the fallow period gets shorter, natural reforesta-
tion can no longer occur and bush fires finish turning the forest into a
savanna. A replacement for forest cultivation systems which have run their
course and savanna systems which are in difficulty will have to be found:
combined crop/livestock farming; lowland development for rice and other
irrigated crops, vegetable gardens, aquaculture; tree crop systems in
association with rainfed and irrigated farming, with livestock and with
aquaculture, and other mixed cropping systems. But these new sustainable
and appropriate cropping systems require more tools and larger resources
than those available to the intertropical forest and savanna farmers whose
only tools are the hoe and the machete. Destruction of these forests by
burning contributes (15 percent) to increasing the concentration of carbon
dioxide in the atmosphere and to promoting the greenhouse effect; the
Committees were nevertheless informed that these phenomena were due mainly
to the burning of fossil fuels.

31. In countries in which land clearance and the expansion of crop and
livestock farming, to the detriment of the forest, reached their limits
centuries ago, methods of forest conservation, management and sustained
development have been perfected and applied by public and private sector
foresters which may be useful in developing countries. The historical
process of deforestation has thus been arrested long ago, and a kind of

- 51 -

reverse trend is now becoming evident in temperate developing countries,
due to natural reforestation or re-planting of land no longer used for
crops and grazing. However, the over-exploitation of forest resources in
the boreal forest taigaa), which has practically ceased in Europe,
continues in other regions of the world, and the threat posed by "acid
rain" to the forests in industrialized regions is very alarming.

32. The gravity of tropical deforestation and its implications for the
sustained development of tropical countries prompted the Committee on
Forest Development in the Tropics to approve the Tropical Forestry Action
Plan (TFAP) in 1985. The TFAP's aims were approved by the Twenty-third
Session of the FAO Conference and FAO successfully fulfils its role as
chief coordinator of this action plan, which represents the "core" of the
Forestry major programme.

33. Finally, the developing countries need considerable assistance to be
able to combat the degradation of their forest heritage and obtain the
greatest possible benefit from the resource and particular attention should
be focused, as is already the case in FAO, on the role forestry can play in
rural development.

G. Agricultural Development and Ecological Risks

34. It appears necessary to review and try to unify the different
positions on this subject. Agriculture is the sector with the most
extensive territorial coverage (land and water taken together) and the one
most capable of destroying natural biomasses and ecosystems on the one
hand, and restoring cultivated biomasses and ecosystems on the other. It
can likewise destroy or perpetuate its activities in a given place; it can
also aggravate or correct negative environmental changes brought about by
activities in other sectors. Finally, it plays a significant role in rural
life and landscapes.

35. The World Commission on Environment and Development drew attention
to the urgency of these problems, and indicated priorities for coordinated
United Nations action in this field. It is clear that these difficulties
are growing and it may be recalled that FAO has already done much to
promote environmental preservation and husbandry of natural resources.

36. Modern agriculture has an important share of the responsibility for
this crisis: inopportune use of mechanization, excessive use of mineral
fertilizers, particularly nitrogens, of pesticides and of other chemical
products, an exaggerated concentration of livestock farms using confinement
methods, and of the effluent from these farms, are abuses which can lead to
erosion (Dust Bowl) and land, water and food pollution. Overly-
concentrated polluting industries also play their part: smoke, smog and
"acid rain", radioactive fallout, liquid effluents, increasing concentra-
tion of carbon dioxide and the greenhouse effect, chloro-fluorocarbon
emissions and the destruction of the ozone layer are already capable of
affecting or threatening the health of mankind and of living organisms in
general. In the developing countries it is because material and technical
resources are lacking and in order to respond to rapidly growing needs that
subsistence agriculture over-exploits pastoral resources and the forest
cover, causes erosion, exhausts soil fertility and neglects agricultural
and water resource management. In overpopulated areas and in areas where
land is not fairly distributed, landless farmers are forced to cultivate
steeply sloping and easily erodable marginal land and destroy the still
wooded strips bordering agricultural land.

- 52 -

37. The environmental crisis is therefore not independent of world
economic, and food and agricultural distortions and imbalances, but rather
the expression and consequence of such distortions and imbalances: on the
one hand, an excess of means, and abuse in the use of them; on the other,
insufficient means and over-exploitation and exhaustion of resources
bequeathed by the past. In the very long term, the solution to the crisis
will involve restoring the balance of the economy, and of agricultural
production and food consumption. In the medium term, ways will have to be
found to limit the damage to the environment and, where possible, avoid
irreversible destruction, which would first affect the people living in the
degraded areas; the victim in the long term, however, would be humanity as
a whole. Moreover, as a result of increasing needs, pressure on the
environment will tend to grow.

38. Consequently, it may be considered that FAO should play a more
active role in this field, and FAO's priority to sustainable development
may be supported; however this should not be interpreted as a way of
diverting the Organization's resources away from food production
development, since the most serious ecological disaster is, first and
foremost, that which directly affects human beings, in other words, poverty
and undernutrition.

39. In view of the fact that poor people often live in areas which are
either underprivileged, seriously degraded or suffering from inadequate
maintenance and bad land and water management, FAO should maintain a
dynamic and constructive concept of resource management for agricultural
and rural development. In concrete terms that would mean designing (in all
areas where environmental problems of any kind whatever are factors
limiting production and leading to poverty) agricultural and rural
development projects with an environment improvement component to permit
not only sustainable, but expanding food and agricultural production
development.

40. The environmental battle can be won by providing these populations
not only with adequate technical means to enable them to produce enough
food for their day-to-day survival, but also with strengthened resources
and means to allow them to devote a greater proportion of their efforts to
increasing the production capacity of the lands they cultivate, but it is
clear that such a supplementary effort to promote sustainable development
will of necessity be more costly.

- 53 -

Annex II: Possible Cost of Implementation of Comnittees' Recam Ienations
based on the estimates presented by the Director-General
in document SJS 4/2

(US$ at 1989 costs)

Reccnmendation
by Committees
(para. reference)

2.64 (iv)

2.64 (vi)

2.64 (ii)

2.64 (i)

3.54 (xv)

2.64 (i)

2.64 (i)

3.53 (xi)

2.64 (vii)

3.51 (i) and (ii)

3.51 (iv)

2.64 (i)

3.53 (xiv)

2.64 (i)

3.52 (vi)

3.53 (xiii)

3.52 (v)

3.53 (xi)

3.53 (xi)

Total:

Initial
(first biennium)

30,000

240,000

900,000

4,000,000

150,000

50,000

200,000

2,000,000

600,000

200,000

680,000

220,000

1,100,000

1,600,000

1,000,000

1,730,000

2,600,000

800,000

2,250,000

20,350,000

Recurrent
(second biennium)

30,000

900,000

4,000,000

150,000

50,000

200,000

2,000,000

600,000

200,000

680,000

220,000

1,100,000

1,600,000
-

1,270,000

2,600,000

240,000

2,250,000

18,090,000

N.B. During their concluding discussions, the Cammittees requested that the
table of estimated costs of the experts' recommendations, as presented in
document SJS 4/2, be modified to eliminate those recommendations of the
experts which the Cammittees had not taken up, in any form, in their own
report.

The table above was prepared on this basis, showing the costings of the
remaining recommendations with cross references to the relevant paragraphs in
the Caomittees' report. No recalculation could be made, due to the time
pressure, to take account of differences between the recommendations as
formulated by the Ccmmittees and those originally made by the experts.

- 55 -

PART II

FAD MANAGEMENT REVIEW

- 56 -

1. Introduction

1.1 The Committees expressed their appreciation of the Director-
General's initiative in commissioning the reports of the Management Con-
sultants, which had not been called for under Conference Resolution 6/87,
and his decision to provide the reports and submit his comments and recom-
mendations thereon to the Committees. The Committees received the Executive
Summaries as submitted by the management consultants in the official
languages; the full reports were also made available in the original
language only because of the timing and the high cost of translation.

1.3 The Committees noted the recommendations in these reports together
with the preliminary and supplementary comments of the Director-General and
were satisfied with the line of action.

2. General

2.1 The Committees expressed satisfaction with the methodology used in
the selection of the management consultants and for opening the Organiza-
tion and its administration to an objective and thorough review.

2.2 They welcomed the comprehensive information and analysis contained
in the reports. As regards the contents and the specific areas identified
in the executive summaries for study, they noted that to a large extent
these areas reflected the original ideas of the Director-General on current
situations and problems. They also noted that, as regards the recommend-
ations, while for some in particular in the field of Printing operations
- early consideration would be desirable, many other recommendations were
for consideration in the medium and longer term, and those of a conceptual
character particularly under the study of accounting matters and the
study of personnel policy and procedures called for many more studies.
Some involved rather complex technical issues requiring careful analysis
which would best be carried out in future sessions of the Finance
Committee.

2.3 The Committees agreed that the feasibility and desirability of
carrying out internally many of the further studies recommended by the
Management Consultants would need to be closely examined. However, the
cost and burden of these studies and the likelihood of feasible solutions
in the foreseeable future would need to be kept in view. It was also agreed
that the option of using external consultants in this exercise was not
excluded.

2.4 The Committees appreciated the very helpful general comments,
reactions, and the supplementary information and views of the Director-
General. Bearing in mind the constitutional responsibility of the
Director-General for the management of the Organization, and the importance

- 57 -

of his advice in judging the desirability, feasibility and cost of imple-
menting these recommendations, the Committees welcomed his intention to
provide further information and views to them. They underlined that they
anticipated that the Finance Committee would be fully involved in this
process as appropriate both in relation to further consideration of these
proposals and the monitoring of progress in their implementation.

2.5 The following sections summarize the discussion of the main points
in the various individual reports.

3. Printing Systems

3.1 The Committees noted that the key printing machines were very expen-
sive to run and that the Organization's needs could now be met more satis-
factorily and economically mainly by the adoption of modern photocopying
and duplicating machines for internal work and the greater use of outside
commercial printing. This would however involve purchase of new equipment,
some reorganization, and a number of staff becoming available for reassign-
ment.

3.2 They recognized the need for the Director-General to perform further
analysis of this important subject and noted that an internal feasibility
study of the proposal was underway.

4. Computer Facilities

4.1 The Committees took note of the consultants' conclusion that the
Organization retain in-house responsibility for operational management of
computer systems and services. The Committees expressed interest and asked
questions about a number of detailed issues, including the state of medium
and long-term EDP plans, the present state of WAICENT, the possibilities
for further office automation, including communication with the FAORs, and
the extensive use of microcomputers.

4.2 The Committees were pleased to note the Director-General's intention
to pursue a number of these issues as soon as possible such as establish-
ment of a unit within AFC for information systems planning and support and
intensification of in-house training. In relation to those recommendations
that have a longer-term character or may involve additional costs they
agreed that the Organization should submit them to further study and report
as appropriate in due course to the Finance Committee.

5. Accounting Policies and Procedures

5.1 The Committees noted that the consultants' report, which had focused
on budgetary controls, monitoring expenditures, delegation of authority
(mainly as regards the MSUs), current accounting procedures, FINSYS, and
external reporting, was one of the more technical and complex of the
reports, but that it recognized the dedication of management and profes-
sional staff and had not revealed any shortcomings in the accounts.

5.2 The Committees noted the Director-General's preliminary and supple-
mentary comments on budgetary control and monitoring of expenditure,
current accounting systems, and the impact of FINSYS. Some differing views
were expressed on the possible implications of full or partial accrual
accounting and disclosure of contingent liabilities. In this connection, it
was recognized that these and other matters required much deeper analysis
as to their implications and feasibility, including possible increased

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staff requirements and other costs, and that some of these matters should
be pursued in greater detail as resources would permit so that the
Director-General could report on the results during future meetings of the
Finance Committee. The Committees welcomed the intention of the Director-
General to pursue these matters, in some cases immediately and in others as
and when resources permit.

6. Treasury Operations

6.1 The Committees welcomed the favourable and supportive views of the
consultants on the current structure and operations of the Treasury and the
dedication and efficiency of its staff. They noted that the main thrust of
the report related to possible improvements in handling foreign exchange
exposures, further delegation of investment decisions, and stronger con-
trols, particularly as regards bank reconciliations.

6.2 The Committees noted the preliminary and supplementary views of the
Director-General on such matters as manuals, cash and investment manage-
ment, internal dealing procedures, banking arrangements, security and
insurance coverage, the maintenance of the present system of assessing
contributions in US dollars, and the timing of a review of FINSYS/PERSYS.
Differing views were expressed on the need for increasing the frequency of
bank reconciliations. Comments were expressed concerning the alternatives
suggested by the consultant regarding the setting of the dollar/lire budget
rate and/or forward purchases of lire. Comments were also made regarding
whether or not there was a need for any change in current practices. The
Committees also looked forward to consideration of the further views of the
Director-General on this matter in due course.

7. Maintenance and Security

7.1 The Committees agreed with the Director-General that the subjects
covered were very detailed and technical matters on internal management.
They took note of the Director-General's preliminary and supplementary
conclusions that envisaged the need for further clarification and careful
consideration over a period of time. They noted that action had been
started on several recommendations that would not involve significant
additional costs.

8. Personnel Services

8.1 The Committees noted that the consultants' work in the area of
personnel was broad and conceptual in nature. Overall, the Committees noted
that this work would contribute to improving the personnel area. It was
further noted that the consultants' report included comments with regard to
the constraints the Organization operates under in carrying out the person-
nel functions, such as the rules and regulations set forth by the Inter-
national Civil Service Commission as part of the UN Common System.

8.2 The Committees recognized that a number of the recommendations
included studies to be performed by the Organization. In that the review
was of a conceptual nature, the Director-General's preliminary and
supplementary comments indicated the need for further consideration as to
which studies might be valuable to the Organization if they were to be
performed.